Item 6. Selected Financial Data.

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Item 6. Selected Financial Data.

FREEPORT-McMoRan INC.

SELECTED FINANCIAL AND OPERATING DATA



	Years Ended December 31,
	2015				2014				2013a			2012			2011
CONSOLIDATED FINANCIAL DATA	(In millions, except per share amounts)
Revenues	$	15,877		b	$	21,438		b	$	20,921	b	$	18,010		$	20,880
Operating (loss) income	$	(13,382	)	b,c,d	$	97		b,c,e	$	5,351	b,c,f	$	5,814	c,g	$	9,140	c,h
Net (loss) income	$	(12,089	)		$	(745	)		$	3,441		$	3,980		$	5,747
Net (loss) income attributable to common stockholders	$	(12,236	)	b,c,d,i	$	(1,308	)	b,c,e,j,k	$	2,658	b,c,f,j,k,l	$	3,041	c,g,j,k	$	4,560	c,h,j,k
Basic net (loss) income per share attributable to common stockholders	$	(11.31	)		$	(1.26	)		$	2.65		$	3.20		$	4.81
Basic weighted-average common shares outstanding	1,082				1,039				1,002			949			947
Diluted net (loss) income per share attributable to common stockholders	$	(11.31	)	b,c,d,i	$	(1.26	)	b,c,e,j,k	$	2.64	b,c,f,j,k,l	$	3.19	c,g,j,k	$	4.78	c,h,j,k
Diluted weighted-average common shares outstanding	1,082				1,039				1,006			954			955
Dividends declared per share of common stock	$	0.2605			$	1.25			$	2.25		$	1.25		$	1.50
Operating cash flows	$	3,220			$	5,631			$	6,139		$	3,774		$	6,620
Capital expenditures	$	6,353			$	7,215			$	5,286		$	3,494		$	2,534
At December 31:
Cash and cash equivalents	$	224			$	464			$	1,985		$	3,705		$	4,822
Property, plant, equipment and mining development costs, net	$	27,509			$	26,220			$	24,042		$	20,999		$	18,449
Oil and gas properties, net	$	7,093			$	19,274			$	23,359		$	—		$	—
Goodwill	$	—			$	—			$	1,916		$	—		$	—
Total assets	$	46,577			$	58,674		m	$	63,385	m	$	35,421	m	$	32,038	m
Total debt, including current portion	$	20,428			$	18,849		m	$	20,618	m	$	3,508	m	$	3,505	m
Redeemable noncontrolling interest	$	764			$	751			$	716		$	—		$	—
Total stockholders’ equity	$	7,828			$	18,287			$	20,934		$	17,543		$	15,642

The selected consolidated financial data shown above is derived from our audited consolidated financial statements. These historical results are not necessarily indicative of results that you can expect for any future period. You should read this data in conjunction with Items 7. and 7A. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures about Market Risks (MD&A) and Item 8. Financial Statements and Supplementary Data thereto contained in our annual report on Form 10-K for the year ended December 31, 2015. All references to income or losses per share are on a diluted basis, unless otherwise noted.


a.	Includes the results of FCX Oil & Gas Inc. (FM O&G) beginning June 1, 2013.


b.	Includes net noncash mark-to-market (losses) gains associated with crude oil and natural gas derivative contracts totaling $(319) million ($(198) million to net loss attributable to common stockholders or $(0.18) per share) for 2015, $627 million ($389 million to net loss attributable to common stockholders or $0.37 per share) for 2014 and $(312) million ($(194) million to net income attributable to common stockholders or $(0.19) per share) for the seven-month period from June 1, 2013, to December 31, 2013.

Includes net noncash mark-to-market (losses) gains associated with crude oil and natural gas derivative contracts totaling $(319) million ($(198) million to net loss attributable to common stockholders or $(0.18) per share) for 2015, $627 million ($389 million to net loss attributable to common stockholders or $0.37 per share) for 2014 and $(312) million ($(194) million to net income attributable to common stockholders or $(0.19) per share) for the seven-month period from June 1, 2013, to December 31, 2013.


c.	Includes net charges (credits) for adjustments to environmental obligations and related litigation reserves of $43 million ($28 million to net loss attributable to common stockholders or $0.03 per share) in 2015, $76 million ($50 million to net loss attributable to common stockholders or $0.05 per share) in 2014, $19 million ($17 million to net income attributable to common stockholders or $0.02 per share) in 2013, $(62) million ($(40) million to net income attributable to common stockholders or $(0.04) per share) in 2012 and $107 million ($86 million to net income attributable to common stockholders or $0.09 per share) in 2011.

Includes net charges (credits) for adjustments to environmental obligations and related litigation reserves of $43 million ($28 million to net loss attributable to common stockholders or $0.03 per share) in 2015, $76 million ($50 million to net loss attributable to common stockholders or $0.05 per share) in 2014, $19 million ($17 million to net income attributable to common stockholders or $0.02 per share) in 2013, $(62) million ($(40) million to net income attributable to common stockholders or $(0.04) per share) in 2012 and $107 million ($86 million to net income attributable to common stockholders or $0.09 per share) in 2011.


d.	The year 2015 includes net charges totaling $13.8 billion to operating loss ($12.0 billion to net loss attributable to common stockholders or $11.11 per share) consisting of (i) $13.1 billion ($11.6 billion to net loss attributable to common stockholders) for impairment of oil and gas properties, (ii) $338 million ($217 million to net loss attributable to common stockholders) for adjustments to copper and molybdenum inventories, (iii) $188 million ($117 million to net loss attributable to common stockholders) for charges at oil and gas operations primarily associated with other asset impairments and inventory write-downs, idle/terminated rig costs and prior year non-income tax assessments related to the California properties, (iv) $156 million ($94 million to net loss attributable to common stockholders) for charges at mining operations primarily associated with asset impairment, restructuring and other net charges and (v) $18 million ($12 million to net loss attributable to common stockholders) for executive retirement benefits, partly offset by (vi) a net gain of $39 million ($25 million to net loss attributable to common stockholders) for the sale of the Luna Energy power facility.

The year 2015 includes net charges totaling $13.8 billion to operating loss ($12.0 billion to net loss attributable to common stockholders or $11.11 per share) consisting of (i) $13.1 billion ($11.6 billion to net loss attributable to common stockholders) for impairment of oil and gas properties, (ii) $338 million ($217 million to net loss attributable to common stockholders) for adjustments to copper and molybdenum inventories, (iii) $188 million ($117 million to net loss attributable to common stockholders) for charges at oil and gas operations primarily associated with other asset impairments and inventory write-downs, idle/terminated rig costs and prior year non-income tax assessments related to the California properties, (iv) $156 million ($94 million to net loss attributable to common stockholders) for charges at mining operations primarily associated with asset impairment, restructuring and other net charges and (v) $18 million ($12 million to net loss attributable to common stockholders) for executive retirement benefits, partly offset by (vi) a net gain of $39 million ($25 million to net loss attributable to common stockholders) for the sale of the Luna Energy power facility.


e.	The year 2014 includes net charges totaling $4.8 billion to operating income ($3.6 billion to net loss attributable to common stockholders or $3.46 per share) consisting of (i) $3.7 billion ($2.3 billion to net loss attributable to common stockholders) for impairment of oil and gas properties, (ii) $1.7 billion ($1.7 billion to net loss attributable to common stockholders) to impair the full carrying value of goodwill, (ii) $46 million ($29 million to net loss attributable to common stockholders) for charges at oil and gas operations primarily associated with idle/terminated rig costs and inventory write-downs and (iv) $6 million ($4 million to net loss attributable to common stockholders) for adjustments to molybdenum inventories, partly offset by (v) net gains on sales of assets of $717 million ($481 million to net loss attributable to common stockholders) primarily from the sale of our 80 percent interests in the Candelaria and Ojos del Salado mining operations.

The year 2014 includes net charges totaling $4.8 billion to operating income ($3.6 billion to net loss attributable to common stockholders or $3.46 per share) consisting of (i) $3.7 billion ($2.3 billion to net loss attributable to common stockholders) for impairment of oil and gas properties, (ii) $1.7 billion ($1.7 billion to net loss attributable to common stockholders) to impair the full carrying value of goodwill, (ii) $46 million ($29 million to net loss attributable to common stockholders) for charges at oil and gas operations primarily associated with idle/terminated rig costs and inventory write-downs and (iv) $6 million ($4 million to net loss attributable to common stockholders) for adjustments to molybdenum inventories, partly offset by (v) net gains on sales of assets of $717 million ($481 million to net loss attributable to common stockholders) primarily from the sale of our 80 percent interests in the Candelaria and Ojos del Salado mining operations.


f.	The year 2013 includes net charges totaling $232 million to operating income ($137 million to net income attributable to common stockholders or $0.14 per share) consisting of (i) $80 million ($50 million to net income attributable to common stockholders) for transaction and related costs principally associated with our oil and gas acquisitions, (ii) $76 million ($49 million to net income attributable to common stockholders) associated with updated mine plans at Morenci that resulted in a loss in recoverable leach stockpiles, (iii) $37 million ($23 million to net income attributable to common stockholders) for restructuring an executive employment arrangement, (iv) $36 million ($13 million to net income attributable to common stockholders) associated with a labor agreement at Cerro Verde and (v) $3 million ($2 million to net income attributable to common stockholders) for adjustments to molybdenum inventories.

The year 2013 includes net charges totaling $232 million to operating income ($137 million to net income attributable to common stockholders or $0.14 per share) consisting of (i) $80 million ($50 million to net income attributable to common stockholders) for transaction and related costs principally associated with our oil and gas acquisitions, (ii) $76 million ($49 million to net income attributable to common stockholders) associated with updated mine plans at Morenci that resulted in a loss in recoverable leach stockpiles, (iii) $37 million ($23 million to net income attributable to common stockholders) for restructuring an executive employment arrangement, (iv) $36 million ($13 million to net income attributable to common stockholders) associated with a labor agreement at Cerro Verde and (v) $3 million ($2 million to net income attributable to common stockholders) for adjustments to molybdenum inventories.


g.	The year 2012 includes net charges totaling $16 million to operating income ($8 million to net income attributable to common stockholders or $0.01 per share) associated with a labor agreement at Candelaria.


h.	The year 2011 includes net charges totaling $57 million to operating income ($19 million to net income attributable to common stockholders or $0.02 per share) consisting of (i) $116 million ($50 million to net income attributable to common stockholders) associated with labor agreements at PT Freeport Indonesia (PT-FI), Cerro Verde and El Abra, partly offset by (ii) a gain of $59 million ($31 million to net income attributable to common stockholders) for the settlement of an insurance claim for business interruption and property damage related to PT-FI's concentrate pipelines.

The year 2011 includes net charges totaling $57 million to operating income ($19 million to net income attributable to common stockholders or $0.02 per share) consisting of (i) $116 million ($50 million to net income attributable to common stockholders) associated with labor agreements at PT Freeport Indonesia (PT-FI), Cerro Verde and El Abra, partly offset by (ii) a gain of $59 million ($31 million to net income attributable to common stockholders) for the settlement of an insurance claim for business interruption and property damage related to PT-FI's concentrate pipelines.


i.	The year 2015 includes a gain of $92 million ($92 million to net loss attributable to common stockholders or $0.09 per share) related to net proceeds received from insurance carriers and other third parties related to the shareholder derivative litigation settlement.


j.	Includes after-tax net gains (losses) on early extinguishment of debt totaling $3 million (less than $0.01 per share) in 2014, $(28) million ($(0.03) per share) in 2013, $(149) million ($(0.16) per share) in 2012 and $(60) million ($(0.06) per share) in 2011.


k.	As further discussed in "Consolidated Results - Provision for Income Taxes" contained in MD&A , amounts include net tax charges of $121 million ($103 million net of noncontrolling interests or $0.10 per share) in 2014 and a net tax benefit of $199 million ($0.20 per share) in 2013. In addition, the year 2012 includes a net tax benefit of $205 million ($98 million net of noncontrolling interests or $0.11 per share) primarily for adjustments to Cerro Verde's deferred income taxes, and the year 2011 includes a tax charge of $53 million ($49 million net of noncontrolling interests or $0.05 per share) for additional taxes associated with Cerro Verde's election to pay a special mining burden.

As further discussed in "Consolidated Results - Provision for Income Taxes" contained in MD&A , amounts include net tax charges of $121 million ($103 million net of noncontrolling interests or $0.10 per share) in 2014 and a net tax benefit of $199 million ($0.20 per share) in 2013. In addition, the year 2012 includes a net tax benefit of $205 million ($98 million net of noncontrolling interests or $0.11 per share) primarily for adjustments to Cerro Verde's deferred income taxes, and the year 2011 includes a tax charge of $53 million ($49 million net of noncontrolling interests or $0.05 per share) for additional taxes associated with Cerro Verde's election to pay a special mining burden.


l.	The year 2013 includes a gain of $128 million ($0.13 per share) related to our preferred stock investments in and the subsequent acquisition of McMoRan Exploration Co.


m.	Amounts restated to reflect adoption of new accounting guidance for debt issuance costs, which reduced total debt and total assets by $121 million at December 31, 2014, $88 million at December 31, 2013, $19 million at December 31, 2012, and $32 million at December 31, 2011.

FREEPORT-McMoRan INC.

SELECTED FINANCIAL AND OPERATING DATA (Continued)



	Years Ended December 31,
	2015		2014		2013		2012		2011
CONSOLIDATED MINING OPERATING DATA
Copper
Production (millions of recoverable pounds)	4,017		3,904		4,131		3,663		3,691
Production (thousands of recoverable metric tons)	1,822		1,771		1,874		1,662		1,674
Sales, excluding purchases (millions of recoverable pounds)	4,070		3,888		4,086		3,648		3,698
Sales, excluding purchases (thousands of recoverable metric tons)	1,846		1,764		1,853		1,655		1,678
Average realized price per pound	$	2.42	$	3.09	$	3.30	$	3.60	$	3.86
Gold
Production (thousands of recoverable ounces)	1,257		1,214		1,250		958		1,383
Sales, excluding purchases (thousands of recoverable ounces)	1,247		1,248		1,204		1,010		1,378
Average realized price per ounce	$	1,129	$	1,231	$	1,315	$	1,665	$	1,583
Molybdenum
Production (millions of recoverable pounds)	92		95		94		85		83
Sales, excluding purchases (millions of recoverable pounds)	89		95		93		83		79
Average realized price per pound	$	8.70	$	12.74	$	11.85	$	14.26	$	16.98
NORTH AMERICA COPPER MINES
Operating Data, Net of Joint Venture Interest
Copper
Production (millions of recoverable pounds)	1,947		1,670		1,431		1,363		1,258
Production (thousands of recoverable metric tons)	883		757		649		618		571
Sales, excluding purchases (millions of recoverable pounds)	1,988		1,664		1,422		1,351		1,247
Sales, excluding purchases (thousands of recoverable metric tons)	902		755		645		613		566
Average realized price per pound	$	2.47	$	3.13	$	3.36	$	3.64	$	3.99
Molybdenum
Production (millions of recoverable pounds)	37		33		32		36		35
100% Operating Data
Solution extraction/electrowinning (SX/EW) operations
Leach ore placed in stockpiles (metric tons per day)	909,900		1,005,300		1,003,500		998,600		888,300
Average copper ore grade (percent)	0.26		0.25		0.22		0.22		0.24
Copper production (millions of recoverable pounds)	1,134		963		889		866		801
Mill operations
Ore milled (metric tons per day)	312,100		273,800		246,500		239,600		222,800
Average ore grade (percent):
Copper	0.49		0.45		0.39		0.37		0.38
Molybdenum	0.03		0.03		0.03		0.03		0.03
Copper recovery rate (percent)	85.4		85.8		85.3		83.9		83.1
Copper production (millions of recoverable pounds)	972		828		642		592		549
SOUTH AMERICA MININGa
Copper
Production (millions of recoverable pounds)	869		1,151		1,323		1,257		1,306
Production (thousands of recoverable metric tons)	394		522		600		570		592
Sales (millions of recoverable pounds)	871		1,135		1,325		1,245		1,322
Sales (thousands of recoverable metric tons)	395		515		601		565		600
Average realized price per pound	$	2.38	$	3.08	$	3.30	$	3.58	$	3.77
Gold
Production (thousands of recoverable ounces)	—		72		101		83		101
Sales (thousands of recoverable ounces)	—		67		102		82		101
Average realized price per ounce	—		$	1,271	$	1,350	$	1,673	$	1,580
Molybdenum
Production (millions of recoverable pounds)	7		11		13		8		10
SX/EW operations
Leach ore placed in stockpiles (metric tons per day)	193,900		275,200		274,600		229,300		245,200
Average copper ore grade (percent)	0.44		0.48		0.50		0.55		0.50
Copper production (millions of recoverable pounds)	430		491		448		457		439
Mill operations
Ore milled (metric tons per day)	152,100		180,500		192,600		191,400		189,200
Average ore grade:
Copper (percent)	0.46		0.54		0.65		0.60		0.66
Gold (grams per metric ton)	—		0.10		0.12		0.10		0.12
Molybdenum (percent)	0.02		0.02		0.02		0.02		0.02
Copper recovery rate (percent)	81.5		88.1		90.9		90.1		89.6
Copper production (millions of recoverable pounds)	439		660		875		800		867

FREEPORT-McMoRan INC.

SELECTED FINANCIAL AND OPERATING DATA (Continued)



	Years Ended December 31,
	2015		2014		2013		2012			2011
INDONESIA MINING
Operating Data, Net of Joint Venture Interest
Copper
Production (millions of recoverable pounds)	752		636		915		695			846
Production (thousands of recoverable metric tons)	341		288		415		315			384
Sales (millions of recoverable pounds)	744		664		885		716			846
Sales (thousands of recoverable metric tons)	337		301		401		325			384
Average realized price per pound	$	2.33	$	3.01	$	3.28	$	3.58		$	3.85
Gold
Production (thousands of recoverable ounces)	1,232		1,130		1,142		862			1,272
Sales (thousands of recoverable ounces)	1,224		1,168		1,096		915			1,270
Average realized price per ounce	$	1,129	$	1,229	$	1,312	$	1,664		$	1,583
100% Operating Data
Ore milled (metric tons per day):b
Grasberg open pit	115,900		69,100		127,700		118,800			112,900
Deep Ore Zone underground mine	43,700		50,500		49,400		44,600			51,700
Deep Mill Level Zone underground mine	2,900		—		—		—			—
Big Gossan underground mine	—		900		2,100		1,600			1,500
Total	162,500		120,500		179,200		165,000			166,100
Average ore grade:
Copper (percent)	0.67		0.79		0.76		0.62			0.79
Gold (grams per metric ton)	0.79		0.99		0.69		0.59			0.93
Recovery rates (percent):
Copper	90.4		90.3		90.0		88.7			88.3
Gold	83.4		83.2		80.0		75.7			81.2
Production:
Copper (millions of recoverable pounds)	752		651		928		695			882
Gold (thousands of recoverable ounces)	1,232		1,132		1,142		862			1,444
AFRICA MINING
Copper
Production (millions of recoverable pounds)	449		447		462		348			281
Production (thousands of recoverable metric tons)	204		203		210		158			127
Sales (millions of recoverable pounds)	467		425		454		336			283
Sales (thousands of recoverable metric tons)	212		193		206		152			128
Average realized price per pound	$	2.42	$	3.06	$	3.21	$	3.51		$	3.74
Cobalt
Production (millions of contained pounds)	35		29		28		26			25
Sales (millions of contained pounds)	35		30		25		25			25
Average realized price per pound	$	8.21	$	9.66	$	8.02	$	7.83		$	9.99
Ore milled (metric tons per day)	14,900		14,700		14,900		13,000			11,100
Average ore grade (percent):
Copper	4.00		4.06		4.22		3.62			3.41
Cobalt	0.43		0.34		0.37		0.37			0.40
Copper recovery rate (percent)	94.0		92.6		91.4		92.4			92.5
MOLYBDENUM MINES
Molybdenum production (millions of recoverable pounds)	48		51		49		41		c	38
Ore milled (metric tons per day)	34,800		39,400		35,700		20,800		d	22,300		d
Average molybdenum ore grade (percent)	0.20		0.19		0.19		0.23		d	0.24		d
OIL AND GAS OPERATIONSe
Sales Volumes:
Oil (million barrels)	35.3		40.1		26.6
Natural gas (billion cubic feet)	89.7		80.8		54.2		—			—
Natural gas liquids (NGLs) (million barrels)	2.4		3.2		2.4		—			—
Million barrels of oil equivalents	52.6		56.8		38.1		—			—
Average Realizations:
Oil (per barrel)	$	57.11	$	90.00	$	98.32	—			—
Natural gas (per million British thermal units)	$	2.59	$	4.23	$	3.99	—			—
NGLs (per barrel)	$	18.90	$	39.73	$	38.20	—			—


a.	Includes the results of the Candelaria and Ojos del Salado mines prior to their sale in November 2014.


b.	Represents the approximate average daily throughput processed at PT-FI’s mill facilities from each producing mine.


c.	Includes production from the Climax molybdenum mine, which began commercial operations in May 2012.


d.	The years 2012 and 2011 reflect operating data of only the Henderson mine.


e.	Represents the results of FM O&G beginning June 1, 2013.

Ratio of Earnings to Fixed Charges

For the ratio of earnings to fixed charges calculation, earnings consist of income (loss) from continuing operations before income taxes, noncontrolling interests in consolidated subsidiaries, equity in affiliated companies’ net (losses) earnings, cumulative effect of accounting changes and fixed charges. Fixed charges include interest and that portion of rent deemed representative of interest. The ratio of earnings to fixed charges and preferred stock dividends is the same as the ratio of earnings to fixed charges for the years presented because no shares of preferred stock were outstanding during these years. Our ratio of earnings to fixed charges was as follows for the years presented:



	Years Ended December 31,
	2015		2014		2013	2012	2011
Ratio of earnings to fixed charges	—	a	—	b	7.4x	19.8x	20.7x


a.	As a result of the loss recorded in 2015, the ratio coverage was less than 1:1. FCX would have needed to generate additional earnings of $14.2 billion to achieve coverage of 1:1 in 2015.


b.	As a result of the loss recorded in 2014, the ratio coverage was less than 1:1. FCX would have needed to generate additional earnings of $657 million to achieve coverage of 1:1 in 2014.

Items 7. and 7A. Management's Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk.

In Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk, “we,” “us” and “our” refer to Freeport-McMoRan Inc. (FCX) and its consolidated subsidiaries. The results of operations reported and summarized below are not necessarily indicative of future operating results (refer to “Cautionary Statement” for further discussion). References to “Notes” are Notes included in our Notes to Consolidated Financial Statements. Throughout Management's Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk, all references to income or losses per share are on a diluted basis, unless otherwise noted.

OVERVIEW

We are a premier United States (U.S.)-based natural resources company with an industry-leading global portfolio of mineral assets and significant oil and natural gas resources. We are the world's largest publicly traded copper producer. Our portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world's largest copper and gold deposits; significant mining operations in North and South America; the Tenke Fungurume (Tenke) minerals district in the Democratic Republic of Congo (DRC) in Africa; and significant U.S. oil and natural gas assets, including reserves in the Deepwater Gulf of Mexico (GOM), onshore and offshore California and in the Haynesville shale in Louisiana, and a position in the Inboard Lower Tertiary/Cretaceous natural gas trend onshore in South Louisiana.

Our results for 2015, compared with 2014, were significantly affected by lower price realizations from copper and oil. Results for both years were also impacted by impairment charges associated with oil and gas properties totaling $13.1 billion ($11.6 billion to net loss attributable to common stockholders) in 2015 and $5.5 billion ($4.0 billion to net loss attributable to common stockholders) in 2014 (refer to "Critical Accounting Estimates" and Note 2 for further discussion of these impairment charges). Refer to “Consolidated Results” for discussion of items impacting our consolidated results for the three years ended December 31, 2015.

We have significant mineral reserves, resources and future development opportunities within our portfolio of mining assets. At December 31, 2015, our estimated consolidated recoverable proven and probable mineral reserves totaled 99.5 billion pounds of copper, 27.1 million ounces of gold and 3.05 billion pounds of molybdenum, which were determined using long-term average prices of $2.00 per pound for copper, $1,000 per ounce for gold and $10 per pound for molybdenum. Refer to “Critical Accounting Estimates – Mineral Reserves” for further discussion.

A summary of the sources of our consolidated copper, gold and molybdenum production for the year 2015 by geographic location follows:



	Copper		Gold		Molybdenum
North America	48	%	2	%	92	%	a
South America	22		—		8
Indonesia	19		98		—
Africa	11		—		—
	100	%	100	%	100	%


a.	Our Henderson and Climax molybdenum mines produced 52 percent of consolidated molybdenum production, and our North America copper mines produced 40 percent.

Copper production from the Grasberg mine in Indonesia, Morenci mine in North America and Cerro Verde mine in South America together totaled 55 percent of our consolidated copper production in 2015.

Our oil and gas business has significant proved, probable and possible reserves with organic growth opportunities. Our estimated proved oil and natural gas reserves at December 31, 2015, totaled 252 million barrels of oil equivalents (MMBOE), with 82 percent comprised of oil and natural gas liquids (NGLs). For 2015, our oil and gas sales volumes totaled 52.6 MMBOE, including 35.3 million barrels (MMBbls) of crude oil, 89.7 billion cubic feet (Bcf) of natural gas and 2.4 MMBbls of NGLs. Refer to “Operations” for further discussion of our oil and gas operations and to “Critical Accounting Estimates – Oil and Natural Gas Reserves” for further discussion of our reserves.

Our Board of Directors (the Board) is undertaking a strategic review of alternatives for our oil and gas business (FCX Oil & Gas Inc., or FM O&G). We and our advisors are actively engaged with interested participants in a process to evaluate opportunities that include asset sales and joint venture arrangements that would generate cash proceeds for debt repayment. We expect to advance the evaluation of these alternatives during the first half of 2016.

At December 31, 2015, we had $20.4 billion in total debt. We have announced initiatives to accelerate our debt reduction plans. Several initiatives are currently being advanced, including an evaluation of alternatives for the oil and gas business as well as several potential transactions involving certain of our mining assets.

In February 2016, we entered into a definitive agreement to sell a 13 percent undivided interest in the Morenci unincorporated joint venture to Sumitomo Metal Mining Co., Ltd. for $1.0 billion in cash and also reached agreement with our bank group to amend our revolving credit facility and term loan. Refer to Note 18 for further discussion.

REVISED OPERATING PLANS

During 2015, in response to weak market conditions, we took actions to enhance our financial position, including significant reductions in capital spending, production curtailments at certain North and South America mines (which resulted in aggregate annual reductions of 350 million pounds of copper and 34 million pounds of molybdenum) and actions to reduce operating, exploration and administrative costs (refer to “Operations” for further discussion). In addition, we generated approximately $2 billion in gross proceeds from at-the-market equity programs, and our Board reduced our annual common stock dividend from $1.25 per share to $0.20 per share in March 2015, and subsequently suspended the annual common stock dividend in December 2015 (refer to Note 10 and “Capital Resources and Liquidity” for further discussion).

Concerns about the global economy, and particularly the weakening of the Chinese economy, have dominated financial market sentiment and negatively impacted commodity prices, including copper. Oil prices have weakened to multi-year lows in response to excess global supplies and relatively weak economic conditions. Current market conditions and uncertainty about the timing of economic and commodity price recovery require us to continue taking actions to strengthen our financial position, reduce debt and re-focus our portfolio of assets. Our business strategy is focused on our position as a leading global copper producer. We will continue to manage our production activities, spending on capital projects and operations, and the administration of our business to enhance cash flows, and intend to complete significant asset sale transactions to reduce debt. We are confident about the longer term outlook for copper prices based on the global demand and supply fundamentals. With our established reserves and large-scale current production base, our significant portfolio of undeveloped resources, and our global

organization of highly qualified and dedicated workers and management, we believe we are well positioned to generate significant asset sale proceeds while retaining an attractive portfolio of high-quality assets.

OUTLOOK

We view the long-term outlook for our business positively, supported by limitations on supplies of copper and by the requirements for copper and oil in the world’s economy. Our financial results vary as a result of fluctuations in market prices primarily for copper, gold, molybdenum and oil, as well as other factors. World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control. Because we cannot control the price of our products, the key measures that management focuses on in operating our business are sales volumes, unit net cash costs for our mining operations, cash production costs per barrel of oil equivalents (BOE) for our oil and gas operations, operating cash flow and capital expenditures.

Projections included in this annual report on Form 10-K for the year ended December 31, 2015, do not reflect PT-FI continuing to pay a 5.0 percent export duty on concentrate or the results of any potential transactions with third parties to raise cash for debt reduction, including the recently announced transaction to sell a 13 percent undivided interest in Morenci (refer to Note 18). Additionally, projections for the year 2016 assume renewal of PT-FI's export permit after August 8, 2016,

Sales Volumes. Following are our projected consolidated sales volumes for 2016 and actual consolidated sales volumes for 2015:



	2016		2015
	(Projected)		(Actual)
Copper (millions of recoverable pounds):
North America copper mines	1,820		1,988
South America mining	1,340		871
Indonesia mining	1,475		744
Africa mining	495		467
	5,130		4,070

Gold (thousands of recoverable ounces)	1,835		1,247
Molybdenum (millions of recoverable pounds)	73	a	89
Oil Equivalents (MMBOE)	57.6		52.6


a.	Projected molybdenum sales include 30 million pounds produced by our Molybdenum mines and 43 million pounds produced by our North and South America copper mines.

Consolidated sales for first-quarter 2016 are expected to approximate 1.1 billion pounds of copper, 200 thousand ounces of gold, 19 million pounds of molybdenum and 12.4 MMBOE. Anticipated higher grades from Grasberg in the second half of 2016 are expected to result in approximately 55 percent of consolidated copper sales and 75 percent of consolidated gold sales occurring in the second half of the year. Projected sales volumes are dependent on operational performance and other factors. For other important factors that could cause results to differ materially from projections, refer to "Cautionary Statement."

Mining Unit Net Cash Costs. Unit net cash costs for 2016 are expected to decline significantly from 2015, principally reflecting higher anticipated copper and gold volumes, the impact of lower energy and other input costs and cost reduction initiatives. Assuming average prices of $1,100 per ounce of gold and $4.50 per pound of molybdenum, and achievement of current volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for our copper mines are expected to average $1.10 per pound in 2016, compared with $1.53 per pound in 2015. The impact of price changes in 2016 on consolidated unit net cash costs would approximate $0.015 per pound for each $50 per ounce change in the average price of gold and $0.015 per pound for each $2 per pound change in the average price of molybdenum. Quarterly unit net cash costs vary with fluctuations in volumes and average realized prices (primarily gold and molybdenum prices). Higher anticipated grades from Grasberg in the second half of 2016 are expected to result in lower unit net cash costs in the second half of 2016, compared to the first half of the year. Refer to “Consolidated Results – Production and Delivery Costs” for further discussion of consolidated production costs for our mining operations.

Oil and Gas Cash Production Costs per BOE. Cash production costs per BOE for 2016 are expected to decline from 2015 per BOE costs, principally reflecting increased production from the Deepwater GOM and cost reduction efforts. Based on current sales volume and cost estimates, oil and gas cash production costs are expected to approximate $15 per BOE in 2016, compared with $18.59 per BOE in 2015. Refer to “Operations – Oil and Gas Operations” for further discussion of oil and gas production costs.

Consolidated Operating Cash Flow. Our consolidated operating cash flows vary with volumes, prices realized from copper, gold, molybdenum and oil sales, production costs, income taxes, other working capital changes and other factors. Based on current sales volume and cost estimates, and assuming average prices of $2.00 per pound of copper, $1,100 per ounce of gold, $4.50 per pound of molybdenum and $34 per barrel of Brent crude oil, we estimate consolidated operating cash flows for 2016 of $3.4 billion (net of $0.6 billion in idle rig costs). Projected consolidated operating cash flows for 2016 also reflect an estimated income tax provision of $0.8 billion primarily associated with income from our international mining operations (refer to "Consolidated Results - Income Taxes" for further discussion of projected income taxes). The impact of price changes in 2016 on consolidated operating cash flows would approximate $440 million for each $0.10 per pound change in the average price of copper, $55 million for each $50 per ounce change in the average price of gold, $60 million for each $2 per pound change in the average price of molybdenum and $135 million for each $5 per barrel change in the average Brent crude oil price.

Consolidated Capital Expenditures. Consolidated capital expenditures are expected to approximate $3.4 billion for 2016, including $1.9 billion from the mining business (reflecting $1.4 billion for major projects primarily for underground development activities at Grasberg and remaining costs for the Cerro Verde expansion and $0.5 billion for sustaining capital) and $1.5 billion for oil and gas operations. Consolidated capital expenditures exclude $0.6 billion for idle rig costs associated with drillship contracts, which are included in projected operating cash flows above.

MARKETS

Metals. World prices for copper, gold and molybdenum can fluctuate significantly. During the period from January 2006 through January 2016, the London Metal Exchange (LME) spot copper price varied from a low of $1.26 per pound in 2008 to a record high of $4.60 per pound in 2011; the London Bullion Market Association (London) PM gold price fluctuated from a low of $525 per ounce in 2006 to a record high of $1,895 per ounce in 2011, and the Metals Week Molybdenum Dealer Oxide weekly average price ranged from a low of $4.46 per pound in 2015 to a high of $33.88 per pound in 2008. Copper, gold and molybdenum prices are affected by numerous factors beyond our control as described further in our “Risk Factors” contained in Part I, Item 1A. of our annual report on Form 10-K for the year ended December 31, 2015.

This graph presents LME spot copper prices and combined reported stocks of copper at the LME, Commodity Exchange Inc. (COMEX), a division of the New York Mercantile Exchange (NYMEX), and the Shanghai Futures Exchange from January 2006 through January 2016. Since mid-2014, copper prices have declined because of concerns about slowing growth rates in China, a stronger U.S. dollar and a broad-based decline in commodity prices. During 2015, LME spot copper prices ranged from a low of $2.05 per pound to a high of $2.92 per pound, averaged $2.49 per pound and closed at $2.13 per pound on December 31, 2015. The LME spot copper price closed at $2.08 per pound on February 19, 2016.

We believe the underlying long-term fundamentals of the copper business remain positive, supported by the significant role of copper in the global economy and a challenging long-term supply environment attributable to difficulty in replacing existing large mines' output with new production sources. Future copper prices are expected to be volatile and are likely to be influenced by demand from China and emerging markets, as well as economic activity in the U.S. and other industrialized countries, the timing of the development of new supplies of copper and production levels of mines and copper smelters.

This graph presents London PM gold prices from January 2006 through January 2016. An improving economic outlook, stronger U.S. dollar and positive equity performance contributed to lower demand for gold in 2014 and 2015, resulting in lower prices. During 2015, London PM gold prices ranged from a low of $1,049 per ounce to a high of $1,296 per ounce, averaged $1,160 per ounce and closed at $1,062 per ounce on December 31, 2015. Gold prices closed at $1,231 per ounce on February 19, 2016.

This graph presents the Metals Week Molybdenum Dealer Oxide weekly average price from January 2006 through January 2016. Molybdenum prices have declined since mid-2014 because of weaker demand from global steel and stainless steel producers. During 2015, the weekly average price for molybdenum ranged from a low of $4.46 per pound to a high of $9.35 per pound, averaged $6.66 per pound and was $5.23 per pound on December 31, 2015. The Metals Week Molybdenum Dealer Oxide weekly average price was $5.26 per pound on February 19, 2016.

Oil and Gas. Market prices for crude oil and natural gas can fluctuate significantly. During the period from January 2006 through January 2016, the Brent crude oil price ranged from a low of $27.88 per barrel in 2016 to a high of $146.08 per barrel in 2008 and the NYMEX natural gas contract price fluctuated from a low of $2.03 per million British thermal units (MMBtu) in 2015 to a high of $13.11 per MMBtu in 2008. Crude oil and natural gas prices are affected by numerous factors beyond our control as described further in our “Risk Factors” contained in Part I, Item 1A. of our annual report on Form 10-K for the year ended December 31, 2015.

This graph presents Brent crude oil prices and NYMEX natural gas contract prices from January 2006 through January 2016. Crude oil prices reached a record high in July 2008 as economic growth in emerging economies and the U.S. created high global demand for oil and lower inventories. Since mid-2014, oil prices have significantly declined associated with concerns of global oversupply. During 2015, the Brent crude oil price ranged from a low of $36.11 per barrel to a high of $67.77 per barrel, averaged $53.64 per barrel and was $37.28 per barrel on December 31, 2015. The Brent crude oil price was $33.01 per barrel on February 19, 2016.

CRITICAL ACCOUNTING ESTIMATES

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our consolidated financial statements, which have been prepared in conformity with generally accepted accounting principles (GAAP) in the U.S. The preparation of these statements requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We base these estimates on historical experience and on assumptions that we consider reasonable under the circumstances; however, reported results could differ from those based on the current estimates under different assumptions or conditions. The areas requiring the use of management’s estimates are also discussed in Note 1 under the subheading “Use of Estimates.” Management has reviewed the following discussion of its development and selection of critical accounting estimates with the Audit Committee of our Board.

Mineral Reserves

Recoverable proven and probable reserves are the part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserve determination. The determination of reserves involves numerous uncertainties with respect to the ultimate geology of the ore bodies, including quantities, grades and recovery rates. Estimating the quantity and grade of mineral reserves requires us to determine the size, shape and depth of our ore bodies by analyzing geological data, such as samplings of drill holes, tunnels and other underground workings. In addition to the geology of our mines, assumptions are required to determine the economic feasibility of mining these reserves, including estimates of future commodity prices and demand, the mining methods we use and the related costs incurred to develop and mine our reserves. Our estimates of recoverable proven and probable mineral

reserves are prepared by and are the responsibility of our employees. A majority of these estimates are reviewed annually and verified by independent experts in mining, geology and reserve determination.

At December 31, 2015, our consolidated estimated recoverable proven and probable reserves were determined using long-term average prices of $2.00 per pound for copper, $1,000 per ounce for gold and $10 per pound for molybdenum. The following table summarizes changes in our estimated consolidated recoverable proven and probable copper, gold and molybdenum reserves during 2015 and 2014:



	Coppera (billion pounds)		Gold (million ounces)	Molybdenum (billion pounds)
Consolidated reserves at December 31, 2013	111.2		31.3	3.26
Net additions/revisions	(0.1	)	(0.6)	(0.05)
Production	(3.9	)	(1.2)	(0.10)
Sale of Candelaria and Ojos del Salado mines	(3.7	)	(1.0)	—
Consolidated reserves at December 31, 2014	103.5		28.5	3.11
Net additions/revisions	—		(0.1)	0.03
Production	(4.0	)	(1.3)	(0.09)
Consolidated reserves at December 31, 2015	99.5		27.1	3.05


a.	Includes estimated recoverable metals contained in stockpiles. See below for additional discussion of recoverable copper in stockpiles.

Refer to Note 20 for further information regarding estimated recoverable proven and probable mineral reserves.

As discussed in Note 1, we depreciate our life-of-mine mining and milling assets and values assigned to proven and probable mineral reserves using the unit-of-production (UOP) method based on our estimated recoverable proven and probable mineral reserves. Because the economic assumptions used to estimate mineral reserves may change from period to period and additional geological data is generated during the course of operations, estimates of reserves may change, which could have a significant impact on our results of operations, including changes to prospective depreciation rates and impairments of long-lived asset carrying values. Excluding impacts associated with changes in the levels of finished goods inventories and based on projected copper sales volumes, if estimated copper reserves at our mines were 10 percent higher at December 31, 2015, we estimate that our annual depreciation, depletion and amortization (DD&A) expense for 2016 would decrease by $76 million ($35 million to net income attributable to common stockholders), and a 10 percent decrease in copper reserves would increase DD&A expense by $93 million ($43 million to net income attributable to common stockholders). We perform annual assessments of our existing assets in connection with the review of mine operating and development plans. If it is determined that assigned asset lives do not reflect the expected remaining period of benefit, any change could affect prospective depreciation rates.

As discussed below and in Note 1, we review and evaluate our long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amount of such assets may not be recoverable, and changes to our estimates of recoverable proven and probable mineral reserves could have an impact on our assessment of asset recoverability.

Recoverable Copper in Stockpiles

We record, as inventory, applicable costs for copper contained in mill and leach stockpiles that are expected to be processed in the future based on proven processing technologies. Mill and leach stockpiles are evaluated periodically to ensure that they are stated at the lower of weighted-average cost or net realizable value (refer to Note 4 and "Consolidated Results" for further discussion of inventory adjustments recorded for the three years ended December 31, 2015). Accounting for recoverable copper from mill and leach stockpiles represents a critical accounting estimate because (i) it is generally impracticable to determine copper contained in mill and leach stockpiles by physical count, thus requiring management to employ reasonable estimation methods and (ii) recovery rates from leach stockpiles can vary significantly. Refer to Note 1 for further discussion of our accounting policy for recoverable copper in stockpiles.

At December 31, 2015, estimated consolidated recoverable copper was 3.8 billion pounds in leach stockpiles (with a carrying value of $3.4 billion) and 1.0 billion pounds in mill stockpiles (with a carrying value of $617 million),

compared with 3.6 billion pounds in leach stockpiles (with a carrying value of $3.6 billion) and 0.9 billion pounds in mill stockpiles (with a carrying value of $446 million) at December 31, 2014.

Impairment of Long-Lived Mining Assets

As discussed in Note 1, we assess the carrying values of our long-lived mining assets when events or changes in circumstances indicate that the related carrying amounts of such assets may not be recoverable. In evaluating our long-lived mining assets for recoverability, we use estimates of pre-tax undiscounted future cash flows of our individual mines are used. Estimates of future cash flows are derived from current business plans, which are developed using near-term metal price forecasts reflective of the current price environment and management's projections for long-term average metal prices. In addition to near- and long-term metal price assumptions, other key assumptions include estimates of commodity-based and other input costs; proven and probable mineral reserves estimates, including the timing and cost to develop and produce the reserves; value beyond proven and probable mineral reserve estimates (refer to Note 1); and the use of appropriate discount rates in the measurement of fair value. We believe our estimates and models used to determine fair value are similar to what a market participant would use. As quoted market prices are unavailable for our individual mining operations, fair value is determined through the use of estimated discounted after-tax future cash flows.

As a result of declining copper and molybdenum prices, during 2015 we evaluated our long-lived mining assets for impairment, which resulted in net charges of $37 million at our Tyrone mine. The December 31, 2015, evaluations of the recoverability of our copper mines were based on near-term price assumptions reflecting prevailing copper futures prices, ranging from $2.15 per pound to $2.17 per pound for COMEX and from $2.13 per pound to $2.16 per pound for LME, and a long-term average price of $3.00 per pound. If low copper prices persist or decline further, we could incur potentially significant additional impairments of our long-lived mining assets. The December 31, 2015, evaluations of the recoverability of our molybdenum mines used near-term price assumptions that are consistent with current market prices for molybdenum and a long-term average of $10 per pound. While continued low molybdenum prices could result in impairments of our molybdenum mines, we have incorporated changes in the commercial pricing structure for our chemicals products to promote continuation of chemical-grade production.

In addition to decreases in future metal price assumptions, other events that could result in impairment of our long-lived mining assets include, but are not limited to, decreases in estimated recoverable proven and probable mineral reserves and any event that might otherwise have a material adverse effect on mine site production levels or costs.

Oil and Natural Gas Reserves

Proved reserves represent quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations. The term “reasonable certainty” implies a high degree of confidence that the quantities of oil and gas actually recovered will equal or exceed the estimate. Engineering estimates of proved oil and natural gas reserves directly impact financial accounting estimates, including DD&A and the ceiling limitation under the full cost method. Our proved reserve volumes have been determined in accordance with the U.S. Securities and Exchange Commission (SEC) guidelines, which require the use of an average price, calculated as the twelve-month historical average of the first-day-of-the-month historical reference price as adjusted for location and quality differentials, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions and the impact of derivative contracts. Our reference prices for reserve determination are the West Texas Intermediate (WTI) spot price for crude oil and the Henry Hub price for gas, which were $50.28 per barrel of oil and $2.59 per MMBtu of natural gas at December 31, 2015. These prices are held constant throughout the life of the oil and gas properties, except where such guidelines permit alternate treatment, including the use of fixed and determinable contractual escalations. In accordance with the guidelines and excluding the impact of derivative instruments, the average realized prices used in our reserve reports as of December 31, 2015, were $47.80 per barrel of oil and $2.55 per thousand cubic feet (Mcf) of natural gas. Actual future prices and costs may be materially higher or lower than the average prices and costs as of the date of the reserves estimate.

There are numerous uncertainties inherent in estimating quantities and values of proved oil and natural gas reserves and in projecting future rates of production and the amount and timing of development expenditures, including many factors beyond our control. Future development and abandonment costs are determined at least annually for each of our properties based upon its geographic location, type of production structure, water depth, reservoir depth and characteristics, currently available procedures and consultations with engineering consultants. Because these costs typically extend many years into the future, estimating these future costs is difficult and requires management to make judgments that are subject to future revisions based upon numerous factors,

including changing technology and the political and regulatory environment. Reserve engineering is a subjective process of estimating the recovery from underground accumulations of oil and natural gas that cannot be measured in an exact manner, and the accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Because all reserve estimates are to some degree subjective, the quantities of oil and natural gas that are ultimately recovered, production and operating costs, the amount and timing of future development expenditures, and future oil and natural gas sales prices may all differ from those assumed in our estimates. Refer to Note 21 for further information regarding estimated proved oil and natural gas reserves.

Our average amortization rate per BOE was $33.46 in 2015, $39.74 for 2014 and $35.54 for 2013. Our oil and gas DD&A rate, after the effect of the ceiling test impairments through December 31, 2015, is expected to approximate $20 per BOE. Changes to estimates of proved reserves and other factors could result in changes to the prospective UOP amortization rate for our oil and gas properties, which could have a significant impact on our results of operations. Based on our estimated proved reserves and our net oil and gas properties subject to amortization at December 31, 2015, a 10 percent increase in our costs subject to amortization would increase our amortization rate by approximately $2 per BOE and a 10 percent reduction to proved reserves would increase our amortization rate by approximately $2 per BOE. Changes in estimates of proved oil and natural gas reserves may also affect our ceiling test calculation. Refer to Note 1 and "Impairment of Oil and Gas Properties" below for further discussion.

Impairment of Oil and Gas Properties

As discussed in Note 1, we follow the full cost method of accounting for our oil and gas operations, whereby all costs associated with oil and gas property acquisition, exploration and development activities are capitalized and amortized to expense under the UOP method on a country-by-country basis using estimates of proved oil and natural gas reserves relating to each country where such activities are conducted. The costs of unproved oil and gas properties are excluded from amortization until the properties are evaluated.

Under full cost accounting rules, a "ceiling test" is conducted each quarter to review the carrying value of our oil and gas properties for impairment (refer to Note 1 for further discussion of the ceiling test calculation). The SEC requires that the twelve-month average of the first-day-of-the-month historical reference prices be used to determine the ceiling test limitation. Such prices are utilized except where different prices are fixed and determinable from applicable contracts for the remaining term of those contracts. The reference pricing in ceiling test impairment calculations may cause results that do not reflect current market conditions that exist at the end of an accounting period. For example, in periods of increasing oil and gas prices, the use of a twelve-month historical average price in the ceiling test calculation may result in an impairment. Conversely, in times of declining prices, ceiling test calculations may not result in an impairment.

Using WTI as the reference oil price, the average price was $50.28 per barrel at December 31, 2015, compared with $94.99 per barrel at December 31, 2014. Each quarter end since September 30, 2014, net capitalized costs with respect to FM O&G's proved U.S. oil and gas properties have exceeded the ceiling test limitation specified by the SEC's full cost accounting rules, which resulted in the recognition of impairment charges totaling $13.0 billion in 2015 and $3.7 billion in 2014. In addition, during 2015 impairment charges of $164 million were recorded for international oil and gas properties, primarily related to Morocco (refer to "Operations - Oil and Gas" for further discussion).

If the twelve-month historical average price in 2016 remains below the December 31, 2015, twelve-month average of $50.28 per barrel, the ceiling test limitation will decrease potentially resulting in additional ceiling test impairments of our oil and gas properties. The WTI spot oil price was $29.64 per barrel at February 19, 2016.

If the trailing twelve-month average prices for the period ended December 31, 2015, had been $46.03 per barrel of oil and $2.45 per MMBtu for natural gas, while all other inputs and assumptions remained constant, an additional pre-tax impairment charge of $0.6 billion would have been recorded to our oil and gas properties in 2015. These oil and natural gas prices were determined using a twelve-month simple average of the first-day-of-the-month for the eleven months ended February 2016, and the February 2016 prices were held constant for the remaining one month. This calculation solely reflects the impact of hypothetical lower oil and natural gas prices on our ceiling test limitation and proved reserves as of December 31, 2015. The oil and natural gas price is a single variable in the estimation of our proved reserves, and other factors, as described below, could have a significant impact on future reserves and the present value of future cash flows.

In addition to declines in the trailing twelve-month average oil and natural gas prices, other factors that could result in future impairment of our oil and gas properties include costs transferred from unevaluated properties to the full cost pool without corresponding proved oil and natural gas reserve additions, negative reserve revisions and the future incurrence of exploration, development and production costs. During 2015, we transferred $6.4 billion of costs associated with unevaluated properties to the full cost pool, mostly reflecting impairment of the carrying values of unevaluated properties. As FM O&G completes activities to assess its unevaluated properties, related costs currently recorded as unevaluated properties not subject to amortization will be transferred to the full cost pool. If these activities do not result in additions to discounted future net cash flows from proved oil and natural gas reserves at least equal to the related costs transferred (net of related tax effects), additional ceiling test impairments are expected to result at current price levels.

At December 31, 2015, we had $4.8 billion of costs for unproved oil and gas properties, which are excluded from amortization. These costs will be transferred into the amortization base (i.e., full cost pool) as the properties are evaluated and proved reserves are established or if impairment is determined. We assess our unproved properties periodically (at least annually), and if impairment is indicated, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and subject to amortization. Accordingly, an impairment of unproved properties does not immediately result in the recognition of a charge to the consolidated statements of income, but rather increases the costs subject to amortization and the costs subject to the ceiling limitation under the full cost accounting method. Following a review of the carrying values of unevaluated properties during 2015, FM O&G determined that the carrying values of certain of its unevaluated properties were impaired primarily resulting from declines in oil prices and changes in operating plans. The transfer of costs into the amortization base involves a significant amount of judgment and may be subject to changes over time based on our drilling plans and results, geological and geophysical evaluations, the assignment of proved reserves, availability of capital and other factors.

Because the transfer of unevaluated property to the full cost pool requires significant judgment and the ceiling test used to evaluate impairment of our proved oil and gas properties requires us to make several estimates and assumptions that are subject to risk and uncertainty, changes in these estimates and assumptions could result in the impairment of our oil and gas properties. Events that could result in impairment of our oil and gas properties include, but are not limited to, decreases in future crude oil and natural gas prices, decreases in estimated proved oil and natural gas reserves, increases in production, development or abandonment costs and any event that might otherwise have a material adverse effect on our oil and gas production levels or costs.

Environmental Obligations

Our current and historical operating activities are subject to various national, state and local environmental laws and regulations that govern the protection of the environment, and compliance with those laws requires significant expenditures. Environmental expenditures are expensed or capitalized, depending upon their future economic benefits. The guidance provided by U.S. GAAP requires that liabilities for contingencies be recorded when it is probable that obligations have been incurred, and the cost can be reasonably estimated. At December 31, 2015, environmental obligations recorded in our consolidated balance sheet totaled $1.2 billion, which reflect obligations for environmental liabilities attributed to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) or analogous state programs and for estimated future costs associated with environmental matters. Refer to Notes 1 and 12 for further discussion of environmental obligations, including a summary of changes in our estimated environmental obligations for the three years ended December 31, 2015.

Accounting for environmental obligations represents a critical accounting estimate because changes to environmental laws and regulations and/or circumstances affecting our operations could result in significant changes to our estimates, which could have a significant impact on our results of operations. We perform a comprehensive annual review of our environmental obligations and also review changes in facts and circumstances associated with these obligations at least quarterly. Judgments and estimates are based upon currently available facts, existing technology, presently enacted laws and regulations, remediation experience, whether or not we are a potentially responsible party (PRP), the ability of other PRPs to pay their allocated portions and take into consideration reasonably possible outcomes. Our cost estimates can change substantially as additional information becomes available regarding the nature or extent of site contamination, updated cost assumptions (including increases and decreases to cost estimates), changes in the anticipated scope and timing of remediation activities, the settlement of environmental matters, required remediation methods and actions by or against governmental agencies or private parties.

Asset Retirement Obligations

We record the fair value of our estimated asset retirement obligations (AROs) associated with tangible long-lived assets in the period incurred. Fair value is measured as the present value of cash flow estimates after considering inflation and a market risk premium. Our cost estimates are reflected on a third-party cost basis and comply with our legal obligation to retire tangible long-lived assets in the period incurred. These cost estimates may differ from financial assurance cost estimates for reclamation activities because of a variety of factors, including obtaining updated cost estimates for reclamation activities, the timing of reclamation activities, changes in scope and the exclusion of certain costs not considered reclamation and closure costs. At December 31, 2015, AROs recorded in our consolidated balance sheet totaled $2.8 billion, including $1.1 billion associated with our oil and gas operations. Refer to Notes 1 and 12 for further discussion of reclamation and closure costs, including a summary of changes in our AROs for the three years ended December 31, 2015.

Generally, ARO activities are specified by regulations or in permits issued by the relevant governing authority, and management judgment is required to estimate the extent and timing of expenditures. Accounting for AROs represents a critical accounting estimate because (i) we will not incur most of these costs for a number of years, requiring us to make estimates over a long period, (ii) reclamation and closure laws and regulations could change in the future and/or circumstances affecting our operations could change, either of which could result in significant changes to our current plans, (iii) the methods used or required to plug and abandon non-producing oil and gas wellbores, remove platforms, tanks, production equipment and flow lines, and restore the wellsite could change, (iv) calculating the fair value of our AROs requires management to estimate projected cash flows, make long-term assumptions about inflation rates, determine our credit-adjusted, risk-free interest rates and determine market risk premiums that are appropriate for our operations and (v) given the magnitude of our estimated reclamation, mine closure and wellsite abandonment and restoration costs, changes in any or all of these estimates could have a significant impact on our results of operations.

Taxes

In preparing our annual consolidated financial statements, we estimate the actual amount of income taxes currently payable or receivable as well as deferred income tax assets and liabilities attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates or laws is recognized in income in the period in which such changes are enacted.

Our operations are in multiple jurisdictions where uncertainties arise in the application of complex tax regulations. Some of these tax regimes are defined by contractual agreements with the local government, while others are defined by general tax laws and regulations. We and our subsidiaries are subject to reviews of our income tax filings and other tax payments, and disputes can arise with the taxing authorities over the interpretation of our contracts or laws. The final taxes paid may be dependent upon many factors, including negotiations with taxing authorities. In certain jurisdictions, we must pay a portion of the disputed amount to the local government in order to formally appeal the assessment. Such payment is recorded as a receivable if we believe the amount is collectible.

A valuation allowance is provided for those deferred income tax assets for which the weight of available evidence suggests that the related benefits will not be realized. In determining the amount of the valuation allowance, we consider estimated future taxable income or loss as well as feasible tax planning strategies in each jurisdiction. If we determine that we will not realize all or a portion of our deferred income tax assets, we will increase our valuation allowance. Conversely, if we determine that we will ultimately be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced.

At December 31, 2015, our valuation allowances totaled $4.2 billion, covering U.S. federal and state deferred tax assets, including all of our U.S. foreign tax credit carryforwards, U.S. minimum tax credit carryforwards, foreign net operating loss carryforwards, and a portion of our U.S. federal and state net operating loss carryforwards. Refer to "Consolidated Results - Income Taxes" for discussion of tax charges recording in 2015 associated with the impairment of U.S. oil and gas properties. At December 31, 2014, valuation allowances totaled $2.4 billion, and covered a portion of our U.S. foreign tax credit carryforwards, foreign net operating loss carryforwards, U.S. state net operating loss carryforwards and U.S. state deferred tax assets. Refer to Note 11 for further discussion.

CONSOLIDATED RESULTS



	Years Ended December 31,
	2015				2014a				2013a,b
SUMMARY FINANCIAL DATA	(in millions, except per share amounts)
Revenuesc,d,e	$	15,877			$	21,438			$	20,921
Operating (loss) incomec,d,e,f,g	$	(13,382	)	h,i,j,k	$	97		h,i,k	$	5,351	l
Net (loss) income attributable to common stockholdersd,e,f,g,m	$	(12,236	)	h,i,j,k,n	$	(1,308	)	h,i,k,o,p	$	2,658	l,o,p,q
Diluted net (loss) income per share attributable to common stockholdersd,e,f,g,m	$	(11.31	)	h,i,j,k,n	$	(1.26	)	h,i,k,o,p	$	2.64	l,o,p,q
Diluted weighted-average common shares outstanding	1,082				1,039				1,006
Operating cash flowsr	$	3,220			$	5,631			$	6,139
Capital expenditures	$	6,353			$	7,215			$	5,286
At December 31:
Cash and cash equivalents	$	224			$	464			$	1,985
Total debt, including current portion	$	20,428			$	18,849		s	$	20,618	s


a.	Includes the results of the Candelaria and Ojos del Salado mines prior to their sale in November 2014, and the results of Eagle Ford prior to its sale in June 2014.


b.	Includes the results of FM O&G beginning June 1, 2013.

c.As further detailed in Note 16, following is a summary of revenues and operating income (loss) by operating division (in millions):



	Years Ended December 31,
Revenues	2015			2014			2013
North America copper mines	$	5,126		$	5,616		$	5,183
South America mining	1,934			3,532			4,485
Indonesia mining	2,653			3,071			4,087
Africa mining	1,384			1,558			1,637
Molybdenum mines	348			587			522
Rod & Refining	4,154			4,655			5,022
Atlantic Copper Smelting & Refining	1,970			2,412			2,041
U.S. Oil & Gas operations	1,994			4,710			2,616
Other mining, corporate, other & eliminations	(3,686		)	(4,703		)	(4,672		)
Total revenues	$	15,877		$	21,438		$	20,921

Operating income (loss)
North America copper mines	$	648		$	1,698		$	1,506
South America mining	67			1,220			2,063
Indonesia mining	449			719			1,420
Africa mining	256			548			625
Molybdenum mines	(72		)	167			123
Rod & Refining	16			12			23
Atlantic Copper Smelting & Refining	67			(2		)	(75		)
U.S. Oil & Gas operations	(14,189		)	(4,479		)	450
Other mining, corporate, other & eliminations	(624		)	214			(784		)
Total operating (loss) income	$	(13,382	)	$	97		$	5,351


d.	Includes unfavorable adjustments to provisionally priced concentrate and cathode copper sales recognized in prior periods totaling $107 million ($53 million to net loss attributable to common stockholders or $0.05 per share) in 2015, $118 million ($65 million to net loss attributable to common stockholders or $0.06 per share) in 2014 and $26 million ($12 million to net income attributable to common stockholders or $0.01 per share) in 2013. Refer to “Revenues” for further discussion.

Includes unfavorable adjustments to provisionally priced concentrate and cathode copper sales recognized in prior periods totaling $107 million ($53 million to net loss attributable to common stockholders or $0.05 per share) in 2015, $118 million ($65 million to net loss attributable to common stockholders or $0.06 per share) in 2014 and $26 million ($12 million to net income attributable to common stockholders or $0.01 per share) in 2013. Refer to “Revenues” for further discussion.


e.	Includes net noncash mark-to-market (losses) gains associated with crude oil and natural gas derivative contracts totaling $(319) million ($(198) million to net loss attributable to common stockholders or $(0.18) per share) in 2015, $627 million ($389 million to net loss attributable to common stockholders or $0.37 per share) in 2014 and $(312) million ($(194) million to net income attributable to common stockholders or $(0.19) per share) for the seven-month period from June 1, 2013, to December 31, 2013. Refer to "Revenues" for further discussion.

Includes net noncash mark-to-market (losses) gains associated with crude oil and natural gas derivative contracts totaling $(319) million ($(198) million to net loss attributable to common stockholders or $(0.18) per share) in 2015, $627 million ($389 million to net loss attributable to common stockholders or $0.37 per share) in 2014 and $(312) million ($(194) million to net income attributable to common stockholders or $(0.19) per share) for the seven-month period from June 1, 2013, to December 31, 2013. Refer to "Revenues" for further discussion.


f.	Includes net charges for adjustments to environmental obligations and related litigation reserves of $43 million ($28 million to net loss attributable to common stockholders or $0.03 per share) in 2015, $76 million ($50 million to net loss attributable to common stockholders or $0.05 per share) in 2014 and $19 million ($17 million to net income attributable to common stockholders or $0.02 per share) in 2013.

Includes net charges for adjustments to environmental obligations and related litigation reserves of $43 million ($28 million to net loss attributable to common stockholders or $0.03 per share) in 2015, $76 million ($50 million to net loss attributable to common stockholders or $0.05 per share) in 2014 and $19 million ($17 million to net income attributable to common stockholders or $0.02 per share) in 2013.


g.	Includes charges at mining operations for adjustments to copper and molybdenum inventories totaling $338 million ($217 million to net loss attributable to common stockholders or $0.20 per share) in 2015, and for adjustments to molybdenum inventories totaling $6 million ($4 million to net loss attributable to common stockholders or less than $0.01 per share) in 2014 and $3 million ($2 million to net income attributable to common stockholders or less than $0.01 per share) in 2013.

Includes charges at mining operations for adjustments to copper and molybdenum inventories totaling $338 million ($217 million to net loss attributable to common stockholders or $0.20 per share) in 2015, and for adjustments to molybdenum inventories totaling $6 million ($4 million to net loss attributable to common stockholders or less than $0.01 per share) in 2014 and $3 million ($2 million to net income attributable to common stockholders or less than $0.01 per share) in 2013.


h.	Includes charges to reduce the carrying value of oil and gas properties pursuant to full cost accounting rules of $13.1 billion ($11.6 billion to net loss attributable to common stockholders or $10.72 per share) in 2015 and $3.7 billion ($2.3 billion to net loss attributable to common stockholders or $2.24 per share) in 2014. The year 2014 also includes an impairment charge of $1.7 billion ($1.7 billion to net loss attributable to common stockholders or $1.65 per share) for the full carrying value of goodwill. As a result of the impairment to U.S. oil and gas properties, we recorded tax charges of $3.3 billion in 2015 to establish valuation allowances against U.S. federal and state deferred tax assets that will not generate a future benefit. These tax charges have been reflected in the after tax impacts for the impairment of oil and gas properties in 2015.

Includes charges to reduce the carrying value of oil and gas properties pursuant to full cost accounting rules of $13.1 billion ($11.6 billion to net loss attributable to common stockholders or $10.72 per share) in 2015 and $3.7 billion ($2.3 billion to net loss attributable to common stockholders or $2.24 per share) in 2014. The year 2014 also includes an impairment charge of $1.7 billion ($1.7 billion to net loss attributable to common stockholders or $1.65 per share) for the full carrying value of goodwill. As a result of the impairment to U.S. oil and gas properties, we recorded tax charges of $3.3 billion in 2015 to establish valuation allowances against U.S. federal and state deferred tax assets that will not generate a future benefit. These tax charges have been reflected in the after tax impacts for the impairment of oil and gas properties in 2015.


i.	Includes charges at oil and gas operations totaling $188 million ($117 million to net loss attributable to common stockholders or $0.11 per share) in 2015, primarily for other asset impairments and inventory write-downs, idle/terminated rig costs and prior year non-income tax assessments related to the California properties, and $46 million ($29 million to net loss attributable to common stockholders or $0.03 per share) in 2014, primarily for idle/terminated rig costs and inventory write-downs.

Includes charges at oil and gas operations totaling $188 million ($117 million to net loss attributable to common stockholders or $0.11 per share) in 2015, primarily for other asset impairments and inventory write-downs, idle/terminated rig costs and prior year non-income tax assessments related to the California properties, and $46 million ($29 million to net loss attributable to common stockholders or $0.03 per share) in 2014, primarily for idle/terminated rig costs and inventory write-downs.


j.	The year 2015 includes charges at mining operations for impairment, restructuring and other net charges totaling $156 million ($94 million to net loss attributable to common stockholders or $0.09 per share) and charges for executive retirement benefits totaling $18 million ($12 million to net loss attributable to common stockholders or $0.01 per share).


k.	Includes net gains on sales of assets of $39 million ($25 million to net loss attributable to common stockholders or $0.02 per share) in 2015 associated with the sale of our one-third interest in the Luna Energy power facility and $717 million ($481 million to net loss attributable to common stockholders or $0.46 per share) in 2014 primarily from the sale of our 80 percent interests in the Candelaria and Ojos del Salado mines.

Includes net gains on sales of assets of $39 million ($25 million to net loss attributable to common stockholders or $0.02 per share) in 2015 associated with the sale of our one-third interest in the Luna Energy power facility and $717 million ($481 million to net loss attributable to common stockholders or $0.46 per share) in 2014 primarily from the sale of our 80 percent interests in the Candelaria and Ojos del Salado mines.


l.	The year 2013 includes charges of (i) $80 million ($50 million to net income attributable to common stockholders or $0.05 per share) for transaction and related costs associated with the oil and gas acquisitions, (ii) $76 million ($49 million to net income attributable to common stockholders or $0.05 per share) associated with updated mine plans at Morenci that resulted in a loss in recoverable leach stockpiles, (iii) $37 million ($23 million to net income attributable to common stockholders or $0.02 per share) for restructuring an executive employment arrangement and (iv) $36 million ($13 million to net income attributable to common stockholders or $0.01 per share) associated with Cerro Verde’s new labor agreements.

The year 2013 includes charges of (i) $80 million ($50 million to net income attributable to common stockholders or $0.05 per share) for transaction and related costs associated with the oil and gas acquisitions, (ii) $76 million ($49 million to net income attributable to common stockholders or $0.05 per share) associated with updated mine plans at Morenci that resulted in a loss in recoverable leach stockpiles, (iii) $37 million ($23 million to net income attributable to common stockholders or $0.02 per share) for restructuring an executive employment arrangement and (iv) $36 million ($13 million to net income attributable to common stockholders or $0.01 per share) associated with Cerro Verde’s new labor agreements.


m.	We defer recognizing profits on intercompany sales until final sales to third parties occur. Refer to "Operations - Smelting & Refining" for a summary of net impacts from changes in these deferrals.


n.	The year 2015 includes a gain of $92 million ($92 million to net loss attributable to common stockholders or $0.09 per share) related to net proceeds received from insurance carriers and other third parties related to the shareholder derivative litigation settlement.


o.	Includes net gains (losses) on early extinguishment of debt totaling $73 million ($3 million to net loss attributable to common stockholders or less than $0.01 per share) in 2014 and $(35) million ($(28) million to net income attributable to common stockholders or $(0.03) per share) in 2013. Refer to Note 8 for further discussion.


p.	Includes net tax charges of $103 million ($0.10 per share) in 2014 and net tax benefits of $199 million ($0.20 per share) in 2013. Refer to Note 11 and "Provision for Income Taxes" below for further discussion.


q.	The year 2013 includes a gain of $128 million ($128 million to net income attributable to common stockholders or $0.13 per share) related to our preferred stock investment in and the subsequent acquisition of McMoRan Exploration Co. (MMR).


r.	Includes net working capital sources (uses) and changes in other tax payments of $373 million in 2015, $(632) million in 2014 and $(377) million in 2013.


s.	Amounts restated to reflect adoption of new accounting guidance for debt issuance costs, which reduced total debt and assets by $121 million in 2014 and $88 million in 2013.



	Years Ended December 31,
	2015		2014a,b		2013a,b,c
SUMMARY OPERATING DATA
Copper
Production (millions of recoverable pounds)	4,017		3,904		4,131
Sales, excluding purchases (millions of recoverable pounds)	4,070		3,888		4,086
Average realized price per pound	$	2.42	$	3.09	$	3.30
Site production and delivery costs per poundd	$	1.78	$	1.90	$	1.88
Unit net cash costs per poundd	$	1.53	$	1.51	$	1.49
Gold
Production (thousands of recoverable ounces)	1,257		1,214		1,250
Sales, excluding purchases (thousands of recoverable ounces)	1,247		1,248		1,204
Average realized price per ounce	$	1,129	$	1,231	$	1,315
Molybdenum
Production (millions of recoverable pounds)	92		95		94
Sales, excluding purchases (millions of recoverable pounds)	89		95		93
Average realized price per pound	$	8.70	$	12.74	$	11.85
Oil Equivalents
Sales volumes:
MMBOE	52.6		56.8		38.1
Thousand BOE (MBOE) per day	144		156		178
Cash operating margin per BOE:e
Realized revenues	$	43.54	$	71.83	$	76.87
Cash production costs	18.59		20.08		17.14
Cash operating margin	$	24.95	$	51.75	$	59.73


a.	Includes the results of the Candelaria and Ojos del Salado mines prior to their sale in November 2014. Sales volumes from the Candelaria and Ojos del Salado mines totaled 268 million pounds of copper and 67 thousand ounces of gold in 2014 and 424 million pounds of copper and 102 thousand ounces of gold in 2013.

Includes the results of Eagle Ford prior to its sale in June 2014. Sales volumes from Eagle Ford totaled 8.7 MMBOE (24 MBOE per day) in 2014; excluding Eagle Ford, oil and gas cash production costs were $21.36 per BOE for the year 2014. Sales volumes from Eagle Ford totaled 9.9 MMBOE (46 MBOE per day) in 2013; excluding Eagle Ford, oil and gas cash production costs were $18.95 per BOE for the year 2013.


c.	Includes the results of FM O&G beginning June 1, 2013.

Reflects per pound weighted-average production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines, excluding net noncash and other costs. For reconciliations of the per pound unit costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements, refer to “Product Revenues and Production Costs.”

Cash operating margin for oil and gas operations reflects realized revenues less cash production costs. Realized revenues exclude noncash mark-to-market adjustments on derivative contracts, and cash production costs exclude accretion and other costs. For reconciliations of realized revenues and cash production costs per BOE to revenues and production and delivery costs reported in our consolidated financial statements, refer to "Product Revenues and Production Costs."

Revenues

Consolidated revenues totaled $15.9 billion in 2015, $21.4 billion in 2014 and $20.9 billion in 2013. Revenues include the sale of copper concentrate, copper cathode, copper rod, gold, molybdenum, silver, cobalt and beginning June 1, 2013, the sale of oil, natural gas and NGLs by our oil and gas operations. Our consolidated revenues for 2015 include sales of copper (67 percent), oil (11 percent), gold (10 percent) and molybdenum (5 percent). Following is a summary of changes in our consolidated revenues between periods (in millions):



	2015			2014

Consolidated revenues - prior year	$	21,438		$	20,921
Mining operations:
Higher (lower) sales volumes from mining operations:
Copper	562			(650		)
Gold	(1		)	58
Molybdenum	(72		)	17
(Lower) higher price realizations from mining operations:
Copper	(2,727		)	(817		)
Gold	(127		)	(105		)
Molybdenum	(360		)	84
Net adjustments for prior year provisionally priced copper sales	11			(92		)
Lower revenues from purchased copper	(95		)	(361		)
(Lower) higher Atlantic Copper revenues	(442		)	371
Oil and gas operations:
Lower oil sales volumes	(438		)	—			a
Lower oil average realized prices, including cash gains (losses) on derivative contracts	(1,159		)	—			a
Higher oil and gas revenues, including cash losses on derivative contracts	—			1,155
Net noncash mark-to-market adjustments on derivative contracts	(946		)	939
Other, including intercompany eliminations	233			(82		)
Consolidated revenues - current year	$	15,877		$	21,438

a. Oil sales volumes and realized prices for the year 2014, are not comparable to the year 2013, as 2013 only includes FM O&G's results beginning June 1, 2013.

Mining Operations

Sales Volumes. Consolidated sales volumes from our mines totaled 4.1 billion pounds of copper, 1.25 million ounces of gold and 89 million pounds of molybdenum in 2015; 3.9 billion pounds of copper, 1.25 million ounces of gold and 95 million pounds of molybdenum in 2014; and 4.1 billion pounds of copper, 1.2 million ounces of gold and 93 million pounds of molybdenum in 2013. Higher consolidated copper sales volumes in 2015, compared with 2014, primarily reflect higher volumes from North America associated with increased production from the Morenci mill expansion project and higher ore grades at the Chino mine, and higher volumes from Indonesia associated with higher mill throughput because of export restrictions in 2014, partly offset by lower volumes from South America as a result of the sale of the Candelaria and Ojos del Salado mines in November 2014.

Lower consolidated copper sales volumes in 2014, compared with 2013, primarily reflect decreased volumes in Indonesia and South America, partly offset by higher volumes from our North America copper mines.

Refer to “Operations” for further discussion of sales volumes at our operating divisions.

Metal Price Realizations. Our consolidated revenues can vary significantly as a result of fluctuations in the market prices of copper, gold and molybdenum, and to a lesser extent silver and cobalt. Our average realized prices were 22 percent lower for copper, 8 percent lower for gold and 32 percent lower for molybdenum in 2015, compared with 2014. In 2014 our average realized prices for copper and gold were 6 percent lower, compared with 2013, and our average realized price for molybdenum was 8 percent higher, compared with 2013.

Provisionally Priced Copper Sales. Impacts of net adjustments for prior year provisionally priced sales primarily relate to copper sales. Substantially all of our copper concentrate and cathode sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) based primarily on quoted LME monthly average spot copper prices (refer to "Disclosures About Market Risks-Commodity Price Risk" for further discussion). Revenues include unfavorable net adjustments to prior years' provisionally priced copper sales totaling $107 million in 2015, $118 million in 2014 and $26 million in 2013.

Purchased Copper. We purchased copper cathode for processing by our Rod & Refining segment totaling 121 million pounds in 2015, 125 million pounds in 2014 and 223 million pounds in 2013. Lower purchased copper revenues in 2015, compared with 2014, primarily reflect lower copper prices. Lower purchased copper revenues in 2014, compared with 2013, primarily reflect lower purchased copper volumes and prices.

Atlantic Copper Revenues. Lower Atlantic Copper revenues in 2015, compared with 2014, primarily reflect lower copper prices. Higher Atlantic Copper revenues in 2014, compared with 2013, primarily reflect the impact of a major maintenance turnaround in 2013.

Oil & Gas Operations

Sales Volumes. Oil sales volumes totaled 35.3 MMBbls in 2015, 40.1 MMBbls in 2014, and 26.6 MMBbls for the seven-month period from June 1, 2013, to December 31, 2013. Oil sales volumes were lower in 2015, compared with 2014, primarily reflecting the sale of the Eagle Ford shale assets in June 2014, partly offset by higher volumes in the GOM. Oil sales volumes for 2014, were higher than sales volumes for the seven-month period from June 1, 2013, to December 31, 2013, primarily reflecting a full year of production in 2014.

Refer to “Operations” for further discussion of sales volumes at our oil and gas operations.

Realized Oil Prices and Derivative Contracts. Our average realized price for oil (excluding the impact of derivative contracts) of $45.58 per barrel in 2015 was 51 percent lower than our average realized price of $92.76 per barrel in 2014. Our average realized price for oil (excluding the impact of derivative contracts) in 2014 was 7 percent lower than our average realized price of $99.67 per barrel for the seven-month period from June 1, 2013, to December 31, 2013.

In connection with the acquisition of our oil and gas business, we had derivative contracts for 2015 consisting of crude oil options, and for 2014 and 2013, we had derivative contracts that consisted of crude oil options, and crude oil and natural gas swaps (refer to Note 14 for further discussion of oil and gas derivative contracts). These crude oil and natural gas derivative contracts were not designated as hedging instruments; accordingly, they were recorded at fair value with the mark-to-market gains and losses recorded in revenues each period. Cash gains (losses) on crude oil and natural gas derivative contracts totaled $406 million in 2015, compared with $(122) million in 2014 and $(22) million for the seven-month period from June 1, 2013, to December 31, 2013. Net noncash mark-to-market (losses) gains on crude oil and natural gas derivative contracts totaled $(319) million in 2015, compared with $627 million for 2014 and $(312) million for the seven-month period from June 1, 2013, to December 31, 2013. FM O&G currently has no derivative contracts in place for 2016 and future years.

Production and Delivery Costs

Consolidated production and delivery costs totaled $11.5 billion in 2015, $11.9 billion in 2014 and $11.8 billion in 2013. Consolidated production and delivery costs in 2015 include asset impairment, restructuring and other net charges at mining operations totaling $156 million and charges at oil and gas operations totaling $188 million, primarily for other asset impairments and inventory write-downs, idle/terminated rig costs and prior year non-income tax assessments related to the California properties. Consolidated production and delivery costs in 2014 include charges at oil and gas operations totaling $46 million, primarily for idle/terminated rig costs and inventory write-downs. Excluding these amounts, lower production and delivery costs from mining operations in 2015, compared with 2014, primarily reflect lower costs at our South America mines as a result of the sale of the Candelaria and Ojos del Salado mines in November 2014 and lower diesel costs in Indonesia, partly offset by higher costs at our North America mines associated with higher volumes. Lower oil and gas production and delivery costs in 2015, compared with 2014, primarily reflect the sale of Eagle Ford in June 2014 and lower well workover expense and steam costs in California.

Higher production and delivery costs for 2014, compared with 2013, were primarily associated with our oil and gas operations, which include a full year of results for 2014, partly offset by lower costs for our mining operations mostly associated with lower volumes in South America and Indonesia.

Mining Unit Site Production and Delivery Costs

Site production and delivery costs for our copper mining operations primarily include labor, energy and commodity-based inputs, such as sulphuric acid, reagents, liners, tires and explosives. Consolidated unit site production and delivery costs (before net noncash and other costs) for our copper mines averaged $1.78 per pound of copper in 2015, $1.90 per pound in 2014 and $1.88 per pound in 2013. Lower consolidated unit site production and delivery costs in 2015, compared with 2014, primarily reflects higher copper sales volumes in North America and Indonesia. Higher consolidated unit site production and delivery costs in 2014, compared with 2013, primarily reflects the impact of lower copper sales volumes in South America and Indonesia, partly offset by higher volumes in North America. Refer to “Operations – Unit Net Cash Costs” for further discussion of unit net cash costs associated with our operating divisions, and to “Product Revenues and Production Costs” for reconciliations of per pound costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements.

Our copper mining operations require significant energy, principally diesel, electricity, coal and natural gas, most of which is obtained from third parties under long-term contracts. Energy represented 17 percent of our consolidated copper production costs in 2015, including purchases of approximately 250 million gallons of diesel fuel; 7,600 gigawatt hours of electricity at our North America, South America and Africa copper mining operations (we generate all of our power at our Indonesia mining operation); 800 thousand metric tons of coal for our coal power plant in Indonesia; and 1 MMBtu of natural gas at certain of our North America mines. Based on current cost estimates, we estimate energy will approximate 20 percent of our consolidated copper production costs for 2016.

Oil and Gas Production Costs per BOE

Production costs for our oil and gas operations primarily include costs incurred to operate and maintain wells and related equipment and facilities, such as lease operating expenses, steam gas costs, electricity, production and ad valorem taxes, and gathering and transportation expenses. Cash production costs for our oil and gas operations averaged $18.59 per BOE in 2015, $20.08 per BOE in 2014 and $17.14 for the seven-month period from June 1, 2013, to December 31, 2013. Lower cash production costs in 2015, compared with 2014, primarily reflects lower well workover expense and steam costs in California. Higher cash production costs in 2014, compared with 2013, primarily reflects the sale of lower cost Eagle Ford properties in June 2014 and higher operating costs in California and the GOM. Refer to "Operations" for further discussion of cash production costs at our oil and gas operations.

Depreciation, Depletion and Amortization

Depreciation will vary under the UOP method as a result of changes in sales volumes and the related UOP rates at our mining and oil and gas operations. Consolidated DD&A totaled $3.5 billion in 2015, $3.9 billion in 2014 and $2.8 billion in 2013. DD&A from our oil and gas operations was $487 million lower in 2015, compared with 2014, primarily reflecting lower DD&A rates as a result of impairments of oil and gas properties and DD&A from our mining operations was $121 million higher in 2015, compared with 2014, mostly associated with higher sales volumes in North America and Indonesia.

Higher DD&A in 2014, compared with 2013, was primarily associated with a full year of expense for oil and gas operations ($2.3 billion in 2014, compared with $1.4 billion for the seven-month period from June 1, 2013, to December 31, 2013).

Impairment of Oil and Gas Properties

Under the full cost accounting rules, a "ceiling test" is conducted each quarter to review the carrying value of the oil and gas properties for impairment. Each quarter end since September 30, 2014, net capitalized costs with respect to our proved U.S. oil and gas properties have exceeded the related ceiling test limitation, which resulted in the recognition of impairment charges totaling $13.0 billion in 2015 and $3.7 billion in 2014. During 2015 we also recognized impairment charges of $164 million for international oil and gas properties, primarily related to unsuccessful exploration activities in Morocco. Refer to Note 1 and "Critical Accounting Estimates" for further discussion, including discussion of potentially significant additional ceiling test impairments.

Copper and Molybdenum Inventory Adjustments

Lower copper and molybdenum prices resulted in adjustments to inventory carrying values totaling $338 million in 2015 for copper and molybdenum, and $6 million in 2014 and $3 million in 2013 for molybdenum. Refer to Notes 1 and 4 for further discussion.

Selling, General and Administrative Expenses

Consolidated selling, general and administrative expenses totaled $569 million in 2015, $592 million in 2014 and $657 million in 2013. Lower consolidated selling, general and administrative expenses, compared with 2014, primarily reflects lower incentive compensation, partly offset by a charge totaling $18 million for executive retirement benefits in 2015. Excluding amounts for our oil and gas operations ($207 million in 2014 and $120 million for the seven-month period from June 1, 2013, to December 31, 2013) selling, general and administrative expenses were lower in 2014, compared with 2013, primarily because of transaction and related costs incurred during 2013 totaling $80 million associated with the oil and gas acquisitions.

We expect selling, general and administrative expenses to decline further in 2016, compared with 2015, as a result of ongoing initiatives to reduce costs.

Consolidated selling, general and administrative expenses exclude capitalized general and administrative expenses at our oil and gas operations totaling $124 million in 2015, $143 million in 2014 and $67 million for the seven-month period from June 1, 2013, to December 31, 2013.

Mining Exploration and Research Expenses

Consolidated exploration and research expenses for our mining operations totaled $127 million in 2015, $126 million in 2014 and $210 million in 2013. Our exploration activities are generally near our existing mines with a focus on opportunities to expand reserves and resources to support development of additional future production capacity in the large mineral districts where we currently operate. Exploration results continue to indicate opportunities for what we believe could be significant future potential reserve additions in North and South America, and in the Tenke minerals district. The drilling data in North America also indicates the potential for significantly expanded sulfide production. Drilling results and exploration modeling provide a long-term pipeline for future growth in reserves and production capacity in an established minerals district.

Exploration spending continues to be reduced from historical levels as a result of market conditions and is expected to approximate $52 million in 2016.

As further discussed in Note 1, exploration costs for our oil and gas operations are capitalized to oil and gas properties.

Environmental Obligations and Shutdown Costs

Environmental obligation costs reflect net revisions to our long-term environmental obligations, which vary from period to period because of changes to environmental laws and regulations, the settlement of environmental matters and/or circumstances affecting our operations that could result in significant changes in our estimates (refer to "Critical Accounting Estimates - Environmental Obligations" for further discussion). Shutdown costs include care and maintenance costs and any litigation, remediation or related expenditures associated with closed facilities or operations. Net charges for environmental obligations and shutdown costs totaled $78 million in 2015, $119 million in 2014 and $66 million in 2013. Refer to Note 12 for further discussion of environmental obligations and litigation matters.

Goodwill Impairment

As further discussed in Notes 1 and 2, the fourth-quarter 2014 goodwill assessment resulted in an impairment charge of $1.7 billion for the full carrying value of goodwill.

Net Gain on Sales of Assets

Net gain on sales of assets totaled $39 million in 2015 related to the sale of our one-third interest in the Luna Energy power facility in New Mexico and $717 million in 2014 primarily related to the sale of our 80 percent interests in the Candelaria and Ojos del Salado mines. Refer to Note 2 for further discussion.

Interest Expense, Net

Consolidated interest expense (excluding capitalized interest) totaled $860 million in 2015, $866 million in 2014 and $692 million in 2013. Higher interest expense in 2015 and 2014, compared with 2013, reflects higher borrowings related to the oil and gas acquisitions.

Capitalized interest varies with the level of expenditures for our development projects and average interest rates on our borrowings, and totaled $215 million in 2015, $236 million in 2014 and $174 million in 2013. Refer to

"Operations" and "Capital Resources and Liquidity - Investing Activities" for further discussion of current development projects.

Net Gain (Loss) on Early Extinguishment of Debt

Net gains (losses) on early extinguishment of debt totaled $73 million in 2014, primarily related to senior note redemptions and tender offers and $(35) million in 2013, associated with the termination of the bridge loan facilities for the oil and gas acquisitions, partly offset by a gain on the redemption of MMR's remaining outstanding 11.875% Senior Notes. Refer to Note 8 for further discussion.

Gain on Investment in MMR

During 2013, we recorded a gain totaling $128 million related to the carrying value of our preferred stock investment in and the subsequent acquisition of MMR. Refer to Note 2 for further discussion.

Other Income (Expense), Net

Other income (expense) primarily includes foreign currency translation adjustments and interest income, and totaled $6 million in 2015, $36 million in 2014 and $(13) million in 2013. The year 2015 also includes a gain of $92 million associated with net proceeds received from insurance carriers and other third parties related to the shareholder derivative litigation (refer to Note 12 for further discussion).

Income Taxes

Following is a summary of the approximate amounts used in the calculation of our consolidated benefit from (provision for) income taxes for the years ended December 31 (in millions, except percentages):



	2015										2014
	Income (Loss)a				Effective Tax Rate		Income Tax (Provision) Benefit				Income (Loss)a				Effective Tax Rate	Income Tax (Provision) Benefit
U.S.	$	(1,654	)	b	44%		$	720			$	1,857			30%	$	(550	)	c,d
South America	(40		)		(10)%		(4		)		1,221				43%	(531		)	e
Indonesia	430				45%		(195		)		709				41%	(293		)
Africa	120				40%		(48		)		379				31%	(116		)
Impairment of oil and gas properties	(13,144		)		37%		4,884				(3,737		)		38%	1,413
Valuation allowance, net	—				N/A		(3,338		)	f	—				N/A	—
Gain on sale of Candelaria and Ojos del Salado	—				N/A		—				671				33%	(221		)
Eliminations and other	267				N/A		(84		)		193				N/A	(26		)
	(14,021		)		14%	h	1,935				1,293				25%	(324		)
Goodwill impairment	—				N/A		—				(1,717		)	g	N/A	—
Consolidated FCX	$	(14,021	)		14%	h	$	1,935			$	(424	)		(76)%	$	(324	)


a.	Represents income (loss) by geographic location before income taxes and equity in affiliated companies’ net (losses) earnings.


b.	Includes a gain of $92 million related to net proceeds received from insurance carriers and other third parties related to the shareholder derivative litigation settlement for which there is no related tax provision.


c.	Includes a charge for deferred taxes recorded in connection with the allocation of goodwill to the sale of Eagle Ford shale assets totaling $84 million.


d.	Includes a net benefit of $41 million, comprised of $57 million related to changes in U.S. state income tax filing positions, partly offset by a charge of $16 million for a change in U.S. federal income tax law regulations.


e.	Includes charges related to changes in Chilean and Peruvian tax rules totaling $78 million ($60 million net of noncontrolling interests).


f.	As a result of the impairment to U.S. oil and gas properties, we recorded tax charges to establish valuation allowances against U.S. federal and state deferred tax assets that will not generate a future benefit.


g.	Reflects goodwill impairment charges, which were non-deductible for tax purposes.

Our consolidated effective income tax rate is a function of the combined effective tax rates for the jurisdictions in which we operate. Accordingly, variations in the relative proportions of jurisdictional income result in fluctuations to our consolidated effective income tax rate. Assuming achievement of current sales volume and cost estimates and average prices of $2.00 per pound for copper, $1,100 per ounce for gold, $4.50 per pound for molybdenum and $34 per barrel of Brent crude oil for

2016, we estimate our consolidated effective tax rate for the year 2016 will approximate 40 percent excluding U.S. domestic losses for which no benefit is expected to be realized.

Following is a summary of the approximate amounts used in the calculation of our consolidated provision for income taxes for the year ended December 31 (in millions, except percentages):



	2013
	Incomea		Effective Tax Rate	Income Tax (Provision) Benefit
U.S.	$	1,080	23%	$	(243	)
South America	2,021		36%	(720		)
Indonesia	1,370		44%	(603		)
Africa	425		31%	(131		)
Eliminations and other	17		N/A	23
	4,913		34%	(1,674		)
Adjustments	—		N/A	199			b
Consolidated FCX	$	4,913	30%	$	(1,475	)


a.	Represents income by geographic location before income taxes and equity in affiliated companies’ net earnings.


b.	Reflects net reductions in our deferred tax liabilities and deferred tax asset valuation allowances resulting from the oil and gas acquisitions.

Refer to Note 11 for further discussion of income taxes.

OPERATIONS

North America Copper Mines

We operate seven open-pit copper mines in North America – Morenci, Bagdad, Safford, Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico. All of the North America mining operations are wholly owned, except for Morenci. We record our 85 percent joint venture interest in Morenci using the proportionate consolidation method.

As further discussed in Note 18, we have entered into a definitive agreement to sell a 13 percent undivided interest in Morenci. Following completion of the transaction, we will own a 72 percent undivided interest in Morenci.

The North America copper mines include open-pit mining, sulfide ore concentrating, leaching and solution extraction/electrowinning (SX/EW) operations. A majority of the copper produced at our North America copper mines is cast into copper rod by our Rod & Refining segment. The remainder of our North America copper sales is in the form of copper cathode or copper concentrate, a portion of which is shipped to Atlantic Copper (our wholly owned smelter). Molybdenum concentrate and silver are also produced by certain of our North America copper mines.

Operating and Development Activities. We have significant undeveloped reserves and resources in North America and a portfolio of potential long-term development projects. In the near term, we are deferring developing new projects as a result of current market conditions. Future investments will be undertaken based on the results of economic and technical feasibility studies and market conditions.

The Morenci mill expansion project, which commenced operations in May 2014, successfully achieved full rates in second-quarter 2015. The project expanded mill capacity from 50,000 metric tons of ore per day to approximately 115,000 metric tons of ore per day, which results in incremental annual production of approximately 225 million pounds of copper and an improvement in Morenci's cost structure. Over the next five years, Morenci's copper production, including our joint venture partner share, is expected to average approximately one billion pounds per year.

Our revised operating plans for the North America copper mines incorporate reductions in mining rates to reduce operating and capital costs, including the suspension of mining operations at the Miami mine (which produced 43 million pounds of copper for the year 2015), the suspension of production at the Sierrita mine (which produced 189 million pounds of copper and 21 million pounds of molybdenum for the year 2015), a 50 percent reduction in mining rates at the Tyrone mine (which produced 84 million pounds of copper for the year 2015) and adjustments to mining

rates at other North America mines. The revised plans at each of the operations incorporate the impacts of lower energy, acid and other consumables, reduced labor costs and a significant reduction in capital spending plans. These plans will continue to be reviewed and additional adjustments may be made as market conditions warrant.

Operating Data. Following is summary operating data for the North America copper mines for the years ended December 31:



	2015		2014		2013
Operating Data, Net of Joint Venture Interest
Copper
Production (millions of recoverable pounds)	1,947		1,670		1,431
Sales, excluding purchases (millions of recoverable pounds)	1,988		1,664		1,422
Average realized price per pound	$	2.47	$	3.13	$	3.36

Molybdenum
Production (millions of recoverable pounds)a	37		33		32

100% Operating Data
SX/EW operations
Leach ore placed in stockpiles (metric tons per day)	909,900		1,005,300		1,003,500
Average copper ore grade (percent)	0.26		0.25		0.22
Copper production (millions of recoverable pounds)	1,134		963		889

Mill operations
Ore milled (metric tons per day)	312,100		273,800		246,500
Average ore grade (percent):
Copper	0.49		0.45		0.39
Molybdenum	0.03		0.03		0.03
Copper recovery rate (percent)	85.4		85.8		85.3
Copper production (millions of recoverable pounds)	972		828		642


a.	Refer to "Consolidated Results" for our consolidated molybdenum sales volumes, which includes sales of molybdenum produced at the North America copper mines.

2015 Compared with 2014

Copper sales volumes from our North America copper mines increased to 2.0 billion pounds in 2015, compared with 1.66 billion pounds in 2014, primarily because of higher mining and milling rates at Morenci and higher ore grades at Morenci, Chino and Safford. Sales from the Morenci mine represented 46 percent of total North America copper sales in 2015 and 41 percent in 2014.

Copper sales from North America are expected to approximate 1.8 billion pounds in 2016. Refer to "Outlook" for projected molybdenum sales volumes.

2014 Compared with 2013

Copper sales volumes from our North America copper mines increased to 1.66 billion pounds in 2014, compared with 1.42 billion pounds in 2013, primarily reflecting higher mining and milling rates at Morenci and higher ore grades at Chino.

Unit Net Cash Costs. Unit net cash costs per pound of copper is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

Gross Profit per Pound of Copper and Molybdenum

The following tables summarize unit net cash costs and gross profit per pound at our North America copper mines for the years ended December 31. Refer to “Product Revenues and Production Costs” for an explanation of the “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.



	2015									2014
	By-				Co-Product Method					By-			Co-Product Method
	Product Method				Copper			Molyb- denuma		Product Method			Copper		Molyb- denuma
Revenues, excluding adjustments	$	2.47			$	2.47		$	7.02	$	3.13		$	3.13	$	11.74
Site production and delivery, before net noncash
and other costs shown below	1.68				1.59			5.61		1.85			1.73		6.85
By-product credits	(0.13		)		—			—		(0.24		)	—		—
Treatment charges	0.12				0.12			—		0.12			0.12		—
Unit net cash costs	1.67				1.71			5.61		1.73			1.85		6.85
Depreciation, depletion and amortization	0.28				0.27			0.53		0.29			0.27		0.60
Copper and molybdenum inventory adjustments	0.07				0.07			0.07		—			—		—
Noncash and other costs, net	0.12			b	0.11			0.16		0.09			0.09		0.07
Total unit costs	2.14				2.16			6.37		2.11			2.21		7.52
Revenue adjustments, primarily for pricing on prior period open sales	(0.01		)		(0.01		)	—		—			—		—
Gross profit per pound	$	0.32			$	0.30		$	0.65	$	1.02		$	0.92	$	4.22

Copper sales (millions of recoverable pounds)	1,985				1,985					1,657			1,657
Molybdenum sales (millions of recoverable pounds)a								37							33


a.	Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing.


b.	Includes $0.05 per pound in 2015 for asset impairment, restructuring and other net charges.

Our North America copper mines have varying cost structures because of differences in ore grades and characteristics, processing costs, by-product credits and other factors. During 2015, average unit net cash costs (net of by-product credits) for the North America copper mines ranged from $1.56 per pound to $2.23 per pound at the individual mines and averaged $1.67 per pound. Lower average unit net cash costs (net of by-product credits) in 2015, compared with $1.73 per pound in 2014, reflects favorable impacts from higher copper sales volumes, partly offset by lower by-product credits.

Because certain assets are depreciated on a straight-line basis, North America's average unit depreciation rate may vary with asset additions and the level of copper production and sales.

Assuming achievement of current volume and cost estimates and an average price of $4.50 per pound of molybdenum for 2016, average unit net cash costs (net of by-product credits) for our North America copper mines are expected to approximate $1.49 per pound of copper in 2016. North America's average unit net cash costs for 2016 would change by approximately $0.02 per pound for each $2 per pound change in the average price of molybdenum during 2016.



	2014							2013
	By-			Co-Product Method				By-				Co-Product Method
	Product Method			Copper		Molyb- denuma		Product Method				Copper		Molyb- denuma
Revenues, excluding adjustments	$	3.13		$	3.13	$	11.74	$	3.36			$	3.36	$	10.79
Site production and delivery, before net noncash
and other costs shown below	1.85			1.73		6.85		2.00				1.94		3.79
By-product credits	(0.24		)	—		—		(0.24		)		—		—
Treatment charges	0.12			0.12		—		0.11				0.11		—
Unit net cash costs	1.73			1.85		6.85		1.87				2.05		3.79
Depreciation, depletion and amortization	0.29			0.27		0.60		0.28				0.27		0.22
Noncash and other costs, net	0.09			0.09		0.07		0.14			b	0.14		0.04
Total unit costs	2.11			2.21		7.52		2.29				2.46		4.05
Revenue adjustments, primarily for pricing on prior period open sales	—			—		—		—				—		—
Gross profit per pound	$	1.02		$	0.92	$	4.22	$	1.07			$	0.90	$	6.74

Copper sales (millions of recoverable pounds)	1,657			1,657				1,416				1,416
Molybdenum sales (millions of recoverable pounds)a						33								32


a.	Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing.


b.	Includes $0.05 per pound associated with updated mine plans at Morenci that resulted in a loss in recoverable copper in leach stockpiles.

Unit net cash costs (net of by-product credits) for our North America copper mines decreased to $1.73 per pound of copper in 2014, compared with $1.87 per pound in 2013, primarily reflecting higher copper sales volumes.

South America Mining

We operate two copper mines in South America – Cerro Verde in Peru (in which we own a 53.56 percent interest) and El Abra in Chile (in which we own a 51 percent interest). These operations are consolidated in our financial statements.

South America mining includes open-pit mining, sulfide ore concentrating, leaching and SX/EW operations. Production from our South America mines is sold as copper concentrate or copper cathode under long-term contracts. Our South America mines also ship a portion of their copper concentrate and cathode to Atlantic Copper. In addition to copper, the Cerro Verde mine produces molybdenum concentrate and silver.

As further discussed in Note 2, on November 3, 2014, we completed the sale of our 80 percent ownership interests in the Candelaria and Ojos del Salado mines.

Operating and Development Activities. The Cerro Verde expansion project commenced operations in September 2015 and is currently operating at full rates. Cerro Verde's expanded operations will benefit from its large-scale, long-lived reserves and cost efficiencies. The project included expanding the concentrator facilities from 120,000 metric tons of ore per day to 360,000 metric tons of ore per day and is expected to provide incremental annual production of approximately 600 million pounds of copper and 15 million pounds of molybdenum.

Our revised operating plans for our South America mines principally reflect adjustments to our mine plan at El Abra (which produced 324 million pounds of copper for the year 2015) to reduce mining and stacking rates by approximately 50 percent to achieve lower operating and labor costs, defer capital expenditures and extend the life of the existing operations.

Operating Data. Following is summary operating data for our South America mining operations for the years ended December 31.



	2015		2014a		2013a
Copper
Production (millions of recoverable pounds)	869		1,151		1,323
Sales (millions of recoverable pounds)	871		1,135		1,325
Average realized price per pound	$	2.38	$	3.08	$	3.30

Gold
Production (thousands of recoverable ounces)	—		72		101
Sales (thousands of recoverable ounces)	—		67		102
Average realized price per ounce	—		$	1,271	$	1,350

Molybdenum
Production (millions of recoverable pounds)b	7		11		13

SX/EW operations
Leach ore placed in stockpiles (metric tons per day)	193,900		275,200		274,600
Average copper ore grade (percent)	0.44		0.48		0.50
Copper production (millions of recoverable pounds)	430		491		448

Mill operations
Ore milled (metric tons per day)	152,100		180,500		192,600
Average ore grade:
Copper (percent)	0.46		0.54		0.65
Gold (grams per metric ton)	—		0.10		0.12
Molybdenum (percent)	0.02		0.02		0.02
Copper recovery rate (percent)	81.5		88.1		90.9
Copper production (millions of recoverable pounds)	439		660		875


a.	Includes the results of the Candelaria and Ojos del Salado mines, prior to their sale in November 2014 and had sales volumes totaling 268 million pounds of copper and 67 thousand ounces of gold in 2014 and 424 million pounds of copper and 102 thousand ounces of gold in 2013.


b.	Refer to "Consolidated Results" for our consolidated molybdenum sales volumes, which includes sales of molybdenum produced at Cerro Verde.

2015 Compared with 2014

Lower consolidated copper sales volumes from South America of 871 million pounds in 2015, compared with 1.14 billion in 2014, primarily reflect the November 2014 sale of the Candelaria and Ojos del Salado mines and lower ore grades at El Abra, partly offset by higher mining and milling rates at Cerro Verde.

For the year 2016, consolidated sales volumes from South America mines are expected to approximate 1.3 billion pounds of copper. Refer to "Outlook" for projected molybdenum sales volumes. As discussed in "Risk Factors" contained in Part I, Item 1A. of our annual report on Form 10-K for the year ended December 31, 2015, in January 2016, the Peruvian government declared a temporary state of emergency with respect to the water supply in the Rio Chili Basin because of drought conditions, which could have a negative impact on production at Cerro Verde.

2014 Compared with 2013

Copper sales volumes from our South America mining operations totaled 1.14 billion pounds in 2014, compared with 1.33 billion pounds in 2013, primarily reflecting lower ore grades at Candelaria and Cerro Verde, and the sale of the Candelaria and Ojos del Salado mines in November 2014.

Gross Profit per Pound of Copper

The following tables summarize unit net cash costs and gross profit per pound at our South America mining operations for the years ended December 31. Unit net cash costs per pound of copper are reflected under the by-product and co-product methods as the South America mining operations also had small amounts of molybdenum, gold and silver sales. Refer to “Product Revenues and Production Costs” for an explanation of the “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.



	2015						2014
	By-Product Method			Co-Product Method			By-Product Method				Co-Product Method
Revenues, excluding adjustments	$	2.38		$	2.38		$	3.08			$	3.08
Site production and delivery, before net noncash
and other costs shown below	1.60			1.56			1.62				1.51
By-product credits	(0.05		)	—			(0.22		)		—
Treatment charges	0.19			0.19			0.17				0.17
Royalty on metals	—			—			0.01				—
Unit net cash costs	1.74			1.75			1.58			a	1.68
Depreciation, depletion and amortization	0.40			0.39			0.32				0.31
Copper inventory adjustments	0.08			0.08			—				—
Noncash and other costs, net	0.05			0.05			0.06				0.06
Total unit costs	2.27			2.27			1.96				2.05
Revenue adjustments, primarily for pricing on
prior period open sales	(0.03		)	(0.03		)	(0.05		)		(0.05		)
Gross profit per pound	$	0.08		$	0.08		$	1.07			$	0.98

Copper sales (millions of recoverable pounds)	871			871			1,135				1,135


a.	Excluding the results of the Candelaria and Ojos del Salado mines, South America mining's unit net cash costs averaged $1.57 per pound in 2014.

During 2015, unit net cash costs (net of by-product credits) for the South America mines ranged from $1.64 per pound for the Cerro Verde mine to $1.91 per pound for the El Abra mine and averaged $1.74 per pound. Higher average unit net cash costs (net of by-product credits) for our South America mining operations in 2015, compared with $1.58 per pound in 2014, primarily reflect lower by-product credits.

Because certain assets are depreciated on a straight-line basis, South America's unit depreciation rate may vary with asset additions and the level of copper production and sales. The unit depreciation rate increased in 2015, compared with 2014, primarily because of the Cerro Verde expansion assets being placed in service in 2015.

Revenue adjustments primarily result from changes in prices on provisionally priced copper sales recognized in prior periods. Refer to “Consolidated Results - Revenues” for further discussion of adjustments to prior period provisionally priced copper sales.

Assuming achievement of current volume and cost estimates and average prices of $4.50 per pound of molybdenum in 2016, we estimate that average unit net cash costs (net of by-product credits) for our South America mining operations would approximate $1.50 per pound of copper in 2016.



	2014							2013
	By-Product Method				Co-Product Method			By-Product Method				Co-Product Method
Revenues, excluding adjustments	$	3.08			$	3.08		$	3.30			$	3.30
Site production and delivery, before net noncash
and other costs shown below	1.62				1.51			1.53			a	1.42
By-product credits	(0.22		)		—			(0.27		)		—
Treatment charges	0.17				0.17			0.17				0.17
Royalty on metals	0.01				—			—				—
Unit net cash costs	1.58			b	1.68			1.43			b	1.59
Depreciation, depletion and amortization	0.32				0.31			0.26				0.24
Noncash and other costs, net	0.06				0.06			0.04				0.03
Total unit costs	1.96				2.05			1.73				1.86
Revenue adjustments, primarily for pricing on
prior period open sales	(0.05		)		(0.05		)	(0.03		)		(0.03		)
Gross profit per pound	$	1.07			$	0.98		$	1.54			$	1.41

Copper sales (millions of recoverable pounds)	1,135				1,135			1,325				1,325


a.	Includes labor agreement costs at Cerro Verde totaling $0.03 per pound.


b.	Excluding the results of Candelaria and Ojos del Salado mines, South America mining's unit net cash costs averaged $1.57 per pound in 2014 and $1.48 per pound in 2013.

Unit net cash costs (net of by-product credits) for our South America mining operations increased to $1.58 per pound of copper in 2014, compared with $1.43 per pound in 2013, primarily reflecting lower sales volumes and by-product credits.

Indonesia Mining

Indonesia mining includes PT-FI’s Grasberg minerals district, one of the world's largest copper and gold deposits, in Papua, Indonesia. We own 90.64 percent of PT-FI, including 9.36 percent owned through our wholly owned subsidiary, PT Indocopper Investama.

PT-FI proportionately consolidates an unincorporated joint venture with Rio Tinto plc (Rio Tinto), under which Rio Tinto has a 40 percent interest in certain assets and a 40 percent interest through 2021 in production exceeding specified annual amounts of copper, gold and silver. After 2021, all production and related revenues and costs are shared 60 percent PT-FI and 40 percent Rio Tinto. Refer to Note 3 for further discussion of our joint venture with Rio Tinto. Under the joint venture arrangements, PT-FI was allocated nearly 100 percent of copper, gold and silver production and sales for each of the three years ended December 31, 2015. At December 31, 2015, the amounts allocated 100 percent to PT-FI remaining to be produced totaled 6.4 billion pounds of copper, 9.7 million ounces of gold and 19.5 million ounces of silver. Based on the current mine plans, PT-FI anticipates that it will be allocated most of the production and related revenues and costs through 2021.

PT-FI produces copper concentrate that contains significant quantities of gold and silver. Substantially all of PT-FI’s copper concentrate is sold under long-term contracts, and in 2015, approximately 37 percent of PT-FI's copper concentrate was sold to PT Smelting, its 25-percent-owned smelter and refinery in Gresik, Indonesia.

Regulatory Matters. In January 2014, the Indonesian government published regulations that among other things imposed a progressive export duty on copper concentrate and restricts concentrate exports after January 12, 2017. Despite PT-FI’s rights under its Contract of Work (COW) to export concentrate without the payment of duties, PT-FI was unable to obtain administrative approval for exports and operated at approximately half of its capacity from mid-January 2014 through July 2014.

In July 2014, PT-FI entered into a Memorandum of Understanding (MOU) with the Indonesian government. Under the MOU, PT-FI provided a $115 million assurance bond to support its commitment for smelter development, agreed to increase royalty rates and agreed to pay export duties (7.5 percent, declining to 5.0 percent when smelter development progress exceeds 7.5 percent and none when development progress exceeds 30 percent). The MOU also anticipated an amendment of the COW within six months to address other matters; however, no terms of the COW other than those relating to the smelter bond, increased royalties and export duties were changed. In January

2015, the MOU was extended to July 25, 2015, and it expired on that date. The increased royalty rates, export duties and smelter assurance bond remain in effect.

PT-FI is required to apply for renewal of export permits at six-month intervals. On July 29, 2015, PT-FI's export permit was renewed through January 28, 2016. In connection with the renewal, export duties were reduced to 5.0 percent, as a result of smelter development progress. On February 9, 2016, PT-FI's export permit was renewed through August 8, 2016. PT-FI will continue to pay a 5.0 percent export duty on concentrate while it reviews its smelter progress with the Indonesian government.

PT-FI continues to engage in discussions with the Indonesian government regarding its COW and long-term operating rights. In October 2015, the Indonesian government provided a letter of assurance to PT-FI indicating that it will approve the extension of operations beyond 2021, and provide the same rights and the same level of legal and fiscal certainty provided under its current COW.

In connection with its COW negotiations and subject to concluding the agreement to extend PT-FI's operations beyond 2021 on acceptable terms, PT-FI has agreed to construct new smelter capacity in Indonesia and to divest an additional 20.64 percent interest in PT-FI at fair market value. PT-FI continues to advance plans for the smelter in parallel with completing its COW negotiations. Refer to Note 13 for further discussion.

We cannot predict whether PT-FI will be successful in reaching a satisfactory agreement on the terms of its long-term mining rights. If PT-FI is unable to reach agreement with the Indonesian government on its long-term rights, we may be required to reduce or defer investments in underground development projects, which could have a material adverse effect on PT-FI’s future production and reserves. In addition, PT-FI would intend to pursue any and all claims against the Indonesian government for breach of contract through international arbitration.

Refer to "Risk Factors" contained in Part I, Item 1A. of our annual report on Form 10-K for the year ended December 31, 2015, for discussion of risks associated with our operations in Indonesia.

Operating and Development Activities. During 2015, PT-FI revised its plans to incorporate improved operational efficiencies, reductions in input costs, supplies and contractor costs, foreign exchange impacts and a deferral of 15 percent of capital expenditures that had been planned for 2016.

PT-FI has several projects in progress in the Grasberg minerals district related to the development of its large-scale, long-lived, high-grade underground ore bodies. In aggregate, these underground ore bodies are expected to produce large-scale quantities of copper and gold following the transition from the Grasberg open pit, currently anticipated to occur in late 2017. Development of the Grasberg Block Cave and Deep Mill Level Zone (DMLZ) underground mines is advancing. Production from the DMLZ mine commenced during September 2015, and the Grasberg Block Cave mine is anticipated to commence production in 2018.

From 2016 to 2020, estimated aggregate capital spending on these projects is currently expected to average $1.0 billion per year ($0.8 billion per year net to PT-FI). Considering the long-term nature and size of these projects, actual costs could vary from these estimates. In response to recent market conditions and the uncertain global economic environment, the timing of these expenditures continues to be reviewed.

The following provides additional information on the continued development of the Common Infrastructure project, the Grasberg Block Cave underground mine and the DMLZ ore body that lies below the Deep Ore Zone (DOZ) underground mine.

Common Infrastructure and Grasberg Block Cave Mine. In 2004, PT-FI commenced its Common Infrastructure project to provide access to its large undeveloped underground ore bodies located in the Grasberg minerals district through a tunnel system located approximately 400 meters deeper than its existing underground tunnel system. In addition to providing access to our underground ore bodies, the tunnel system will enable PT-FI to conduct future exploration in prospective areas associated with currently identified ore bodies. The tunnel system was completed to the Big Gossan terminal, and the Big Gossan mine was brought into production in 2010. Production from the Big Gossan mine, which is currently suspended, is expected to restart in the first half of 2017 and ramp up to 7,000 metric tons of ore per day in 2019. Development of the DMLZ and Grasberg Block Cave underground mines is advancing using the Common Infrastructure project tunnels as access.

The Grasberg Block Cave underground mine accounts for more than 45 percent of our recoverable proven and probable reserves in Indonesia. Production from the Grasberg Block Cave mine is expected to commence in 2018, following the end of mining of the Grasberg open pit. Targeted production rates once the Grasberg Block Cave mining operation reaches full capacity are expected to approximate 160,000 metric tons of ore per day. As a result of current market conditions, PT-FI is reviewing its operating plans to determine the optimum mine plan for the Grasberg Block Cave.

Aggregate mine development capital for the Grasberg Block Cave mine and associated Common Infrastructure is expected to approximate $6.0 billion (incurred between 2008 to 2022), with PT-FI’s share totaling approximately $5.5 billion. Aggregate project costs totaling $2.2 billion have been incurred through December 31, 2015 ($0.5 billion during 2015).

DMLZ. The DMLZ ore body lies below the DOZ underground mine at the 2,590-meter elevation and represents the downward continuation of mineralization in the Ertsberg East Skarn system and neighboring Ertsberg porphyry. The ore body is mined using a block-cave method. Production from the DMLZ underground mine commenced in September 2015. Ore milled from the DMLZ underground mine averaged 2,900 metric tons of ore per day in 2015 (3,500 metric tons of ore per day in fourth-quarter 2015). Targeted production rates once the DMLZ underground mine reaches full capacity are expected to approximate 80,000 metric tons of ore per day in 2021.

Drilling efforts continue to determine the extent of the DMLZ ore body. Aggregate mine development capital costs for the DMLZ underground mine are expected to approximate $2.6 billion (incurred between 2009 to 2020), with PT-FI’s share totaling approximately $1.6 billion. Aggregate project costs totaling $1.5 billion have been incurred through December 31, 2015 ($0.3 billion during 2015).

Operating Data. Following is summary operating data for our Indonesia mining operations for the years ended December 31.



	2015		2014		2013
Operating Data, Net of Joint Venture Interest
Copper
Production (millions of recoverable pounds)	752		636		915
Sales (millions of recoverable pounds)	744		664		885
Average realized price per pound	$	2.33	$	3.01	$	3.28

Gold
Production (thousands of recoverable ounces)	1,232		1,130		1,142
Sales (thousands of recoverable ounces)	1,224		1,168		1,096
Average realized price per ounce	$	1,129	$	1,229	$	1,312

100% Operating Data
Ore milled (metric tons per day):a
Grasberg open pit	115,900		69,100		127,700
DOZ underground mineb	43,700		50,500		49,400
DMLZ underground minec	2,900		—		—
Big Gossan underground mined	—		900		2,100
Total	162,500		120,500		179,200

Average ore grade:
Copper (percent)	0.67		0.79		0.76
Gold (grams per metric ton)	0.79		0.99		0.69
Recovery rates (percent):
Copper	90.4		90.3		90.0
Gold	83.4		83.2		80.0
Production (recoverable):
Copper (millions of pounds)	752		651		928
Gold (thousands of ounces)	1,232		1,132		1,142


a.	Amounts represent the approximate average daily throughput processed at PT-FI’s mill facilities from each producing mine.


b.	Ore milled from the DOZ underground mine is expected to ramp up to over 60,000 metric tons of ore per day in 2017.


c.	Production from the DMLZ underground mine commenced in September 2015.


d.	Production from the from the Big Gossan underground mine is expected to restart in the first half of 2017 and ramp up to 7,000 metric tons of ore per day in 2019.

2015 Compared with 2014

Sales volumes from our Indonesia mining operations increased to 744 million pounds of copper and 1.2 million ounces of gold in 2015, compared with 664 million pounds of copper and 1.2 million ounces of gold in 2014, primarily reflecting higher mill rates because of the 2014 export restrictions, partly offset by lower ore grades.

At the Grasberg mine, the sequencing of mining areas with varying ore grades causes fluctuations in quarterly and annual production of copper and gold. PT-FI expects ore grades to improve significantly beginning in the second-half of 2016 with access to higher grade sections of the Grasberg open pit, resulting in higher production and lower unit net cash costs. Consolidated sales volumes from our Indonesia mining operations are expected to approximate 1.5 billion pounds of copper and 1.8 million ounces of gold for 2016, with approximately 65 percent of copper sales and 75 percent of gold sales anticipated in the second half of the year. Damages to semi-autogenous griding (SAG) mill electrical components in January 2016 will require repairs in the first half of 2016 or as late as 2017, which are expected to have a negative impact on production at PT-FI.

2014 Compared with 2013

Sales volumes from our Indonesia mining operations totaled 664 million pounds of copper and 1.2 million ounces of gold in 2014, compared with 885 million pounds of copper and 1.1 million ounces of gold in 2013, reflecting lower mill throughput resulting from the export restrictions and labor-related work stoppages in 2014, partly offset by higher gold ore grades.

Unit Net Cash Costs. Unit net cash costs per pound of copper is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other metal mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

Gross Profit per Pound of Copper and per Ounce of Gold

The following tables summarize the unit net cash costs and gross profit per pound of copper and per ounce of gold at our Indonesia mining operations for the years ended December 31. Refer to “Production Revenues and Production Costs” for an explanation of “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.



	2015								2014
	By- Product			Co-Product Method					By- Product				Co-Product Method
	Method			Copper			Gold		Method				Copper			Gold
Revenues, excluding adjustments	$	2.33		$	2.33		$	1,129	$	3.01			$	3.01		$	1,229
Site production and delivery, before net noncash
and other costs shown below	2.39			1.32			638		2.76			a	1.59			648
Gold and silver credits	(1.91		)	—			—		(2.25		)		—			—
Treatment charges	0.31			0.17			83		0.26				0.15			61
Export duties	0.15			0.08			39		0.12				0.06			27
Royalty on metals	0.15			0.09			41		0.17				0.10			41
Unit net cash costs	1.09			1.66			801		1.06				1.90			777
Depreciation and amortization	0.39			0.22			105		0.40				0.23			94
Noncash and other costs, net	0.05			0.03			14		0.29			a	0.17			68
Total unit costs	1.53			1.91			920		1.75				2.30			939
Revenue adjustments, primarily for pricing on
prior period open sales	(0.07		)	(0.06		)	7		(0.08		)		(0.08		)	15
PT Smelting intercompany profit	0.01			0.01			4		0.05				0.03			12
Gross profit per pound/ounce	$	0.74		$	0.37		$	220	$	1.23			$	0.66		$	317

Copper sales (millions of recoverable pounds)	744			744					664				664
Gold sales (thousands of recoverable ounces)							1,224									1,168


a.	Fixed costs totaling $0.22 per pound of copper charged directly to cost of sales as a result of the impact of export restrictions on PT-FI's operating rates are excluded from site production and delivery and included in net noncash and other costs in 2014.

A significant portion of PT-FI's costs are fixed and unit costs vary depending on volumes and other factors. Indonesia's unit net cash costs (including gold and silver credits) of $1.09 per pound of copper in 2015 were higher than unit net cash costs of $1.06 per pound in 2014, primarily reflecting lower gold and silver credits, partly offset by lower site production and delivery mostly associated with lower diesel costs and foreign exchange impacts.

PT-FI's royalties totaled $114 million in 2015, $115 million in 2014 and $109 million in 2013, and export duties totaled $109 million in 2015 and $77 million in 2014. Refer to Note 13 for further discussion of PT-FI's royalties.

Because certain assets are depreciated on a straight-line basis, PT-FI’s unit depreciation rate varies with the level of copper production and sales.

PT Smelting intercompany profit represents the change in the deferral of 25 percent of PT-FI's profit on sales to PT Smelting. Refer to "Operations - Smelting & Refining" for further discussion.

Assuming achievement of current volume and cost estimates, and an average gold price of $1,100 per ounce for 2016, Indonesia's unit net cash costs (net of gold and silver credits) are expected to approximate $0.17 per pound of copper for the year 2016. Indonesia's projected unit net cash costs would change by approximately $0.06 per pound for each $50 per ounce change in the average price of gold during 2016. Because of the fixed nature of a large portion of Indonesia's costs, unit costs vary from quarter to quarter depending on copper and gold volumes. Higher anticipated ore grades from Grasberg in the second half of 2016 are expected to result in lower unit net cash costs in the second half of 2016.



	2014									2013
	By- Product				Co-Product Method					By- Product			Co-Product Method
	Method				Copper			Gold		Method			Copper			Gold
Revenues, excluding adjustments	$	3.01			$	3.01		$	1,229	$	3.28		$	3.28		$	1,312
Site production and delivery, before net noncash
and other costs shown below	2.76			a	1.59			648		2.46			1.62			648
Gold and silver credits	(2.25		)		—			—		(1.69		)	—			—
Treatment charges	0.26				0.15			61		0.23			0.15			61
Export duties	0.12				0.06			27		—			—			—
Royalty on metals	0.17				0.10			41		0.12			0.08			33
Unit net cash costs	1.06				1.90			777		1.12			1.85			742
Depreciation and amortization	0.40				0.23			94		0.28			0.19			73
Noncash and other costs, net	0.29			a	0.17			68		0.13			0.09			35
Total unit costs	1.75				2.30			939		1.53			2.13			850
Revenue adjustments, primarily for pricing on
prior period open sales	(0.08		)		(0.08		)	15		—			—			(1		)
PT Smelting intercompany profit (loss)	0.05				0.03			12		(0.02		)	(0.01		)	(6		)
Gross profit per pound/ounce	$	1.23			$	0.66		$	317	$	1.73		$	1.14		$	455

Copper sales (millions of recoverable pounds)	664				664					885			885
Gold sales (thousands of recoverable ounces)								1,168								1,096


a.	Fixed costs totaling $0.22 per pound of copper charged directly to cost of sales as a result of the impact of export restrictions on PT-FI's operating rates are excluded from site production and delivery and included in net noncash and other costs in 2014.

Unit net cash costs (net of gold and silver credits) for our Indonesia mining operations of $1.06 per pound of copper in 2014 were lower than unit net cash costs of $1.12 per pound in 2013, primarily reflecting lower copper sales volumes, the impact of export duties and increased royalty rates, which were more than offset by higher gold and silver credits as a result of lower copper sales volumes.

Africa Mining

Africa mining includes Tenke Fungurume Mining S.A.'s (TFM) Tenke minerals district. We hold an effective 56 percent interest in the Tenke copper and cobalt mining concessions in the Southeast region of the DRC through our consolidated subsidiary TFM, and we are the operator of Tenke.

The Tenke operation includes open-pit mining, leaching and SX/EW operations. Copper production from the Tenke minerals district is sold as copper cathode. In addition to copper, the Tenke minerals district produces cobalt hydroxide.

Operating and Development Activities. TFM completed its second phase expansion project in early 2013, which included increasing mine, mill and processing capacity. Construction of a second sulphuric acid plant is substantially complete. We continue to engage in exploration activities and metallurgical testing to evaluate the potential of the highly prospective minerals district at Tenke. Future development and expansion opportunities are being deferred pending improved market conditions.

Our revised plans at Tenke incorporate a 50 percent reduction in capital spending that had been planned for 2016 and various initiatives to reduce operating, administrative and exploration costs.

Operating Data. Following is summary operating data for our Africa mining operations for the years ended December 31.



	2015		2014		2013
Copper
Production (millions of recoverable pounds)	449		447		462
Sales (millions of recoverable pounds)	467		425		454
Average realized price per pounda	$	2.42	$	3.06	$	3.21

Cobalt
Production (millions of contained pounds)	35		29		28
Sales (millions of contained pounds)	35		30		25
Average realized price per pound	$	8.21	$	9.66	$	8.02

Ore milled (metric tons per day)	14,900		14,700		14,900
Average ore grade (percent):
Copper	4.00		4.06		4.22
Cobalt	0.43		0.34		0.37
Copper recovery rate (percent)	94.0		92.6		91.4


a.	Includes point-of-sale transportation costs as negotiated in customer contracts.

2015 Compared with 2014

Copper sales volumes from TFM increased to 467 million pounds of copper and 35 million pounds of cobalt in 2015, compared with 425 million pounds of copper and 30 million pounds of cobalt in 2014. Higher copper sales volumes primarily reflect timing of shipments and higher cobalt sales volumes primarily reflect higher ore grades.

Consolidated sales volumes from TFM are expected to approximate 495 million pounds of copper and 35 million pounds of cobalt in 2016. Higher projected copper sales volumes from TFM in 2016 primarily reflect higher projected ore grades.

2014 Compared with 2013

Copper sales volumes from TFM decreased to 425 million pounds of copper in 2014, compared with 454 million pounds of copper in 2013, primarily because of lower ore grades.

Gross Profit per Pound of Copper and Cobalt

The following tables summarize the unit net cash costs and gross profit per pound of copper and cobalt at our Africa mining operations for the years ended December 31. Refer to “Production Revenues and Production Costs” for an explanation of “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.



	2015									2014
	By-Product			Co-Product Method						By-Product			Co-Product Method
	Method			Copper			Cobalt			Method			Copper		Cobalt
Revenues, excluding adjustmentsa	$	2.42		$	2.42		$	8.21		$	3.06		$	3.06	$	9.66
Site production and delivery, before net noncash
and other costs shown below	1.58			1.37			5.40			1.56			1.39		5.30
Cobalt creditsb	(0.42		)	—			—			(0.48		)	—		—
Royalty on metals	0.05			0.04			0.14			0.07			0.06		0.16
Unit net cash costs	1.21			1.41			5.54			1.15			1.45		5.46
Depreciation, depletion and amortization	0.55			0.46			1.26			0.54			0.46		1.13
Noncash and other costs, net	0.07			0.06			0.16			0.05			0.04		0.11
Total unit costs	1.83			1.93			6.96			1.74			1.95		6.70
Revenue adjustments, primarily for pricing on
prior period open sales	(0.01		)	(0.01		)	(0.02		)	—			—		0.07
Gross profit per pound	$	0.58		$	0.48		$	1.23		$	1.32		$	1.11	$	3.03

Copper sales (millions of recoverable pounds)	467			467						425			425
Cobalt sales (millions of contained pounds)							35								30


a.	Includes point-of-sale transportation costs as negotiated in customer contracts.


b.	Net of cobalt downstream processing and freight costs.

Higher unit net cash costs (net of cobalt credits) for our Africa mining operations of $1.21 per pound of copper in 2015, compared with $1.15 per pound of copper in 2014, primarily reflects lower cobalt credits. Assuming achievement of current volume and cost estimates, and an average cobalt market price of $10 per pound for 2016, average unit net cash costs (net of cobalt credits) are expected to approximate $1.32 per pound of copper in 2016. Africa's projected unit net cash costs for 2016 would change by $0.09 per pound for each $2 per pound change in the average price of cobalt during 2016.



	2014							2013
	By-Product			Co-Product Method				By-Product			Co-Product Method
	Method			Copper		Cobalt		Method			Copper		Cobalt
Revenues, excluding adjustmentsa	$	3.06		$	3.06	$	9.66	$	3.21		$	3.21	$	8.02
Site production and delivery, before net noncash
and other costs shown below	1.56			1.39		5.30		1.43			1.35		4.35
Cobalt creditsb	(0.48		)	—		—		(0.29		)	—		—
Royalty on metals	0.07			0.06		0.16		0.07			0.06		0.14
Unit net cash costs	1.15			1.45		5.46		1.21			1.41		4.49
Depreciation, depletion and amortization	0.54			0.46		1.13		0.54			0.48		1.00
Noncash and other costs, net	0.05			0.04		0.11		0.06			0.06		0.11
Total unit costs	1.74			1.95		6.70		1.81			1.95		5.60
Revenue adjustments, primarily for pricing on
prior period open sales	—			—		0.07		—			—		0.09
Gross profit per pound	$	1.32		$	1.11	$	3.03	$	1.40		$	1.26	$	2.51

Copper sales (millions of recoverable pounds)	425			425				454			454
Cobalt sales (millions of contained pounds)						30							25


a.	Includes point-of-sale transportation costs as negotiated in customer contracts.


b.	Net of cobalt downstream processing and freight costs.

Unit net cash costs (net of cobalt credits) for our Africa mining operations of $1.15 per pound of copper in 2014 were lower than unit net cash costs of $1.21 per pound of copper in 2013, primarily reflecting higher cobalt credits, partly offset by higher site production and delivery costs associated with input and mine logistics support costs.

Molybdenum Mines

We have two wholly owned molybdenum mines in North America – the Henderson underground mine and the Climax open-pit mine, both in Colorado. The Henderson and Climax mines produce high-purity, chemical-grade molybdenum concentrate, which is typically further processed into value-added molybdenum chemical products. The majority of molybdenum concentrate produced at the Henderson and Climax mines, as well as from our North and South America copper mines, is processed at our own conversion facilities.

Operating and Development Activities. The revised plans for our Henderson molybdenum mine incorporate lower operating rates, resulting in an approximate 65 percent reduction in Henderson's projected annual production volumes. We have also adjusted production plans at our by-product mines, including the impacts of a planned shutdown at our Sierrita mine. Additionally, we have incorporated changes in the commercial pricing structure for our chemical products to promote continuation of chemical-grade production.

Production from our molybdenum mines totaled 48 million pounds of molybdenum in 2015, 51 million pounds in 2014 and 49 million pounds in 2013 . Refer to "Consolidated Results" for our consolidated molybdenum operating data, which includes sales of molybdenum produced at our molybdenum mines and at our North and South America copper mines, and refer to "Outlook" for projected consolidated molybdenum sales volumes.

Unit Net Cash Costs Per Pound of Molybdenum. Unit net cash costs per pound of molybdenum is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

Average unit net cash costs for our molybdenum mines totaled $7.11 per pound of molybdenum in 2015, $7.08 per pound in 2014 and $7.15 per pound in 2013. Assuming achievement of current volume and cost estimates, we estimate unit net cash costs for the molybdenum mines to average $8.25 per pound of molybdenum in 2016, primarily reflecting lower projected molybdenum production. Refer to "Product Revenues and Production Costs" for a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.

Smelting & Refining

We wholly own and operate a smelter in Arizona (Miami Smelter) and a smelter and refinery in Spain (Atlantic Copper). Additionally, PT-FI owns 25 percent of a smelter and refinery in Gresik, Indonesia (PT Smelting). Treatment charges for smelting and refining copper concentrate consist of a base rate per pound of copper and per ounce of gold and are generally fixed. Treatment charges represent a cost to our mining operations and income to Atlantic Copper and PT Smelting. Thus, higher treatment charges benefit our smelter operations and adversely affect our mining operations. Our North America copper mines are less significantly affected by changes in treatment charges because these operations are largely integrated with our Miami smelter. Through this form of downstream integration, we are assured placement of a significant portion of our concentrate production. During 2015, approximately 40 percent of our consolidated concentrate production was processed through the Miami smelter, Atlantic Copper and PT Smelting's facilities.

Atlantic Copper smelts and refines copper concentrate and markets refined copper and precious metals in slimes. Following is a summary of Atlantic Copper's concentrate purchases from our copper mining operations and third parties for the years ended December 31.



	2015			2014		2013
North America copper mines	23	%		21	%	13	%
South America mining	3		a	21		32
Indonesia mining	3			8		16
Third parties	71			50		39
	100	%		100	%	100	%


a.	The decrease in purchases from the South America mines, compared to the years 2014 and 2013, primarily reflects the impact of the November 2014 sale of the Candelaria and Ojos del Salado mines.

PT-FI's contract with PT Smelting requires PT-FI to supply 100 percent of the copper concentrate requirements (at market rates subject to a minimum or maximum rate) necessary for PT Smelting to produce 205,000 metric tons of copper annually on a priority basis. PT-FI may also sell copper concentrate to PT Smelting at market rates for quantities in excess of 205,000 metric tons of copper annually. PT-FI supplied approximately 80 percent of PT Smelting's concentrate requirements in each of the three years ended December 31, 2015, and PT Smelting processed 37 percent in 2015, 58 percent in 2014 and 41 percent in 2013 of PT-FI's concentrate production. PT-Smelting resumed operations in September 2015, following a temporary suspension in July 2015, and operated at approximately 80 percent capacity until November 2015 when required repairs of an acid plant cooling tower that was damaged during the suspension, were completed.

We defer recognizing profits on sales from our mining operations to Atlantic Copper and on 25 percent of Indonesia mining's sales to PT Smelting until final sales to third parties occur. Changes in these deferrals attributable to variability in intercompany volumes resulted in net additions (reductions) to net income attributable to common stockholders totaling $42 million ($0.04 per share) in 2015, $43 million ($0.04 per share) in 2014 and $(17) million ($(0.02) per share) in 2013. Our net deferred profits on inventories at Atlantic Copper and PT Smelting to be recognized in future periods' net income attributable to common stockholders totaled $14 million at December 31, 2015. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices will result in variability in our net deferred profits and quarterly earnings.

Oil and Gas Operations

Through our wholly owned oil and gas subsidiary, FM O&G, our portfolio of oil and gas assets includes significant oil production facilities and growth potential in the Deepwater GOM, established oil production onshore and offshore California, large onshore natural gas resources in the Haynesville shale in Louisiana, natural gas production from the Madden area in central Wyoming, and a position in the Inboard Lower Tertiary/Cretaceous natural gas trend onshore in South Louisiana. For the year 2015, 88 percent of our oil and gas revenues, excluding the impact of derivative contracts, were from oil and NGLs.

Impairment of Oil and Gas Properties. Under the SEC's full cost accounting rules, a "ceiling test" is conducted each quarter to review the carrying value of the oil and gas properties for impairment. Each quarter end since September 30, 2014, net capitalized costs with respect to FM O&G's proved U.S. oil and gas properties exceeded the ceiling test limitation specified by full cost accounting rules, which resulted in the recognition of impairment charges totaling $13.0 billion in 2015 and $3.7 billion in 2014. Refer to "Critical Accounting Estimates" for further discussion of impairment of oil and gas properties.

In 2015, FM O&G also recognized impairment charges of $164 million for international oil and gas properties, primarily related to unsuccessful exploration activities in Morocco. Costs associated with the exploration blocks offshore Morocco were transferred to the Morocco full cost pool when drilling of the MZ-1 well associated with the Ouanoukrim prospect was completed to its targeted depth below 20,000 feet to evaluate the primary objectives and did not contain hydrocarbons. As FM O&G does not have proved reserves or production in Morocco, an impairment charge was recorded.

U.S. Oil and Gas Operations. Following is summary operating results for the U.S. oil and gas operations for the years ended December 31:



	2015				2014a			2013a,b
Sales Volumes
Oil (MMBbls)	35.3				40.1			26.6
Natural gas (Bcf)	89.7				80.8			54.2
NGLs (MMBbls)	2.4				3.2			2.4
MMBOE	52.6				56.8			38.1

Average Realizationsc
Oil (per barrel)	$	57.11			$	90.00		$	98.32
Natural gas (per MMBtu)	$	2.59			$	4.23		$	3.99
NGLs (per barrel)	$	18.90			$	39.73		$	38.20

Gross (Loss) Profit per BOE
Realized revenuesc	$	43.54			$	71.83		$	76.87
Less: cash production costsc	18.59				20.08			17.14
Cash operating marginc	24.95				51.75			59.73
Less: depreciation, depletion and amortization	34.28				40.34			35.81
Less: impairment of oil and gas properties	246.67				65.80			—
Less: accretion and other costs	4.41			d	1.69			0.79
Plus: net noncash mark-to-market (losses) gains on derivative contracts	(6.07		)		11.03			(8.20		)
Plus: other net adjustments	0.43				0.06			0.04
Gross (loss) profit	$	(266.05	)		$	(44.99	)	$	14.97


a.	Includes results of Eagle Ford prior to its sale in June 2014.


b.	Reflects the results of FM O&G beginning June 1, 2013.

Cash operating margin for oil and gas operations reflects realized revenues less cash production costs. Realized revenues exclude noncash mark-to-market adjustments on derivative contracts, and cash production costs exclude accretion and other costs. For reconciliations of realized revenues (including average realizations for oil, natural gas and NGLs) and cash production costs to revenues and production and delivery costs reported in our consolidated financial statements, refer to the supplemental schedule, "Product Revenues and Production Costs."


d.	Includes $3.58 per BOE primarily for other asset impairments and inventory write-downs, idle/terminated rig costs and prior year non-income tax assessments at the California properties.

Excluding the impact of realized cash gains (losses) on derivative contracts of $11.53 per barrel for 2015, $(2.76) per barrel in 2014 and $(1.35) per barrel for the seven-month period from June 1, 2013, to December 31, 2013, the average realized price for crude oil was $45.58 per barrel in 2015 (85 percent of the average Brent crude oil price of $53.64 per barrel), $92.76 per barrel in 2014 (93 percent of the average Brent crude oil price of $99.45 per barrel) and $99.67 per barrel in for the seven-month period from June 1, 2013, to December 31, 2013 (92 percent of the average Brent crude oil price of $108.66 per barrel).

FM O&G's average realized price for natural gas was $2.59 per MMBtu in 2015, $4.23 per MMBtu in 2014 ($4.37 per MMBtu excluding the impact of derivative contracts) and $3.99 per MMBtu ($3.73 per MMBtu excluding the impact of derivative contracts) for the seven-month period from June 1, 2013, to December 31, 2013, compared to the NYMEX natural gas price average of $2.66 per MMBtu for the year 2015 contracts, $4.41 per MMBtu for the year 2014 contracts, and $3.67 per MMBtu for the June through December 2013 contracts.

2015 Compared with 2014

Realized revenues for oil and gas operations of $43.54 per BOE for the year 2015 were lower than realized revenues of $71.83 per BOE for the year 2014, primarily reflecting lower oil prices, partly offset by the impact of higher cash gains on derivative contracts (cash gains of $7.72 per BOE in 2015, compared with cash losses of $2.15 per BOE in 2014).

Cash production costs for oil and gas operations of $18.59 per BOE for the year 2015 were lower than cash production costs of $20.08 for the year 2014, primarily reflecting lower well workover expense and steam costs in California.

Based on current sales volume and cost estimates, cash production costs are expected to decline to approximately $15 per BOE for the year 2016, primarily reflecting increased production from the Deepwater GOM and cost reduction efforts.

2014 Compared with 2013

Realized revenues for oil and gas operations of $71.83 per BOE for the year 2014 were lower than realized revenues of $76.87 per BOE for the seven-month period from June 1, 2013, to December 31, 2013, primarily reflecting lower oil prices and higher cash losses on derivative contracts (cash losses of $2.15 per BOE in 2014, compared with $0.58 per BOE for the seven-month period from June 1, 2013, to December 31, 2013).

Cash production costs of $20.08 per BOE for the year 2014 were higher than cash production costs of $17.14 per BOE for the seven-month period from June 1, 2013, to December 31, 2013, primarily reflecting the sale of lower cost Eagle Ford properties in June 2014 and higher operating costs in California and the GOM.

Daily Sales Volumes. Following is a summary of average sales volumes per day by region for oil and gas operations for the years ended December 31:



	2015	2014		2013a
Sales Volumes (MBOE per day):
GOMb	83	73		72
California	37	39		39
Haynesville/Madden/Other	24	20	c	21
Eagle Ford	—	24		46
Total oil and gas operations	144	156		178


a.	Reflects the results of FM O&G beginning June 1, 2013.


b.	Includes sales from properties on the GOM Shelf and in the Deepwater GOM; 2015 also includes sales from properties in the Inboard Lower Tertiary/Cretaceous natural gas trend.


c.	Results include volume adjustments related to Eagle Ford's pre-close sales; FM O&G completed the sale of Eagle Ford in June 2014.

Daily sales volumes averaged 144 MBOE for the year 2015, including 96 MBbls of crude oil, 246 MMcf of natural gas and 7 MBbls of NGLs; 156 MBOE for the year 2014, including 110 MBbls of crude oil, 221 MMcf of natural gas and 9 MBbls of NGLs; and 178 MBOE for the seven-month period from June 1, 2013, including 124 MBbls of crude oil, 254 MMcf of natural gas and 11 MBbls of NGLs. Oil and gas sales volumes are expected to average 158 MBOE per day for the year 2016, comprised of 74 percent oil, 21 percent natural gas and 5 percent NGLs.

Exploration, Operating and Development Activities. Our oil and gas business has significant proved, probable and possible reserves with valuable infrastructure and associated resources with long-term production and development potential.

Since commencing development activities in 2014 at its three 100-percent-owned production platforms in the Deepwater GOM, FM O&G has drilled 14 wells in producing fields with positive results, including the King D-10 well in fourth-quarter 2015. Four of these wells have been brought on production, including the King D-12 well in November 2015. FM O&G plans to complete and place six additional wells on production in 2016.

We are taking continuing actions to reduce oil and gas costs and capital expenditures, including undertaking a near-term deferral of exploration and development activities by idling the three Deepwater GOM drillships FM O&G has under contract. Past investments are expected to enable production to be increased from rates of 144 MBOE per day in 2015 to an average of 157 MBOE per day in 2016 and 2017, and cash production costs to decline to approximately$15 per BOE in 2016 and 2017.

FM O&G expects to incur idle rig costs associated with its drillship contracts totaling an estimated $0.6 billion in 2016 and $0.4 billion in 2017.

Oil and Gas Capital Expenditures. Capital expenditures for our oil and gas operations totaled $3.0 billion in 2015 (including $2.5 billion incurred for Deepwater GOM and $0.2 billion for the Inboard Lower Tertiary/Cretaceous natural gas trend). Capital expenditures for oil and gas operations for the year 2016 are estimated to total $1.5

billion, which excludes $0.6 billion for idle rig costs. Approximately 85 percent of the 2016 capital budget is expected to be directed to the GOM.

Deepwater GOM. FM O&G operates and owns 100-percent working interests in the large-scale Holstein, Marlin and Horn Mountain deepwater production platforms, which in total have processing capacity of 250 MBbls of oil per day. In addition, FM O&G has interests in the Lucius and Heidelberg oil fields and in the Atwater Valley focus area, as well as interests in the Ram Powell and Hoover deepwater production platforms.

During 2015, field development continued at Heidelberg in the Green Canyon focus area and first oil production commenced in January 2016. Three wells are expected to begin producing during the initial phase and another two wells are scheduled to be drilled and come on line at a later date. Heidelberg is a subsea development consisting of five subsea wells tied back to a truss spar hull located in 5,300 feet of water. Heidelberg field was discovered in November 2008 and the subsequent development project was sanctioned in early 2013. FM O&G has a 12.5 percent working interest in Heidelberg.

During 2015, FM O&G continued drilling at Holstein Deep. Completion activities for the initial three-well subsea tieback development program are progressing on schedule, with first production expected by mid-2016. In aggregate, the three wells are estimated to commence production at approximately 24 MBOE per day. The Holstein Deep development is located in Green Canyon Block 643, west of the 100-percent-owned Holstein platform in 3,890 feet of water, with production facilities capable of processing 113 MBbls of oil per day.

FM O&G’s 100-percent-owned Marlin Hub is located in the Mississippi Canyon focus area and has production facilities capable of processing 60 MBbls of oil per day. FM O&G has drilled five successful tieback opportunities in the area since 2014, including the 100-percent-owned Dorado and King development projects.

During 2015, FM O&G drilled three successful wells at the King field, which is located in Mississippi Canyon south of the Marlin facility in 5,200 feet of water. During fourth-quarter 2015, FM O&G established production from the first King well (D-12) and logged oil pay in the King D-10 well. In 2016, FM O&G plans to complete and tieback the King D-13 well to the Marlin production platform. The King D-9 and D-10 wells are expected to be completed in future periods.

FM O&G’s 100-percent-owned Horn Mountain field is also located in the Mississippi Canyon focus area and has production facilities capable of processing 75 MBbls of oil per day. During 2015, FM O&G successfully drilled three wells in the Horn Mountain area, including the Quebec/Victory (Q/V), Kilo/Oscar (K/O) and Horn Mountain Deep wells. To enhance recovery of remaining oil in place, future development plans will target subsea tieback from multiple stacked sands in the area. In 2016, FM O&G plans to complete and tie back two wells to the Horn Mountain production platform, including the Q/V and K/O wells.

FM O&G has a broad set of assets with valuable infrastructure and associated resources with attractive long-term production and development potential, including the Vito and Power Nap oil discoveries in the Atwater Valley area and a large Deepwater GOM project inventory with over 150 undeveloped locations.

Inboard Lower Tertiary/Cretaceous. FM O&G has a position in the Inboard Lower Tertiary/Cretaceous natural gas trend, located onshore in South Louisiana. During November 2015, FM O&G completed the installation of additional processing facilities to accommodate higher flow rates from the Highlander well, which began production in February 2015. In December 2015, gross rates from the Highlander well averaged approximately 44 MMcf per day (approximately 21 MMcf per day net to FM O&G). FM O&G is the operator and has a 72 percent working interest and an approximate 49 percent net revenue interest in Highlander.

California. Sales volumes from California averaged 37 MBOE per day for 2015, compared with 39 MBOE per day for 2014. FM O&G’s position in California is located onshore in the San Joaquin Valley and Los Angeles Basin, and offshore in the Point Pedernales field. Since second-quarter 2015, production from Point Arguello platforms has been shut in following the shutdown of a third-party operated pipeline system that transports oil to various California refineries.

Haynesville. FM O&G has rights to a substantial natural gas resource, located in the Haynesville shale in Louisiana. Drilling activities remain constrained in response to low natural gas prices in order to maximize near-term cash flows and to preserve the resource for potentially higher future natural gas prices.

CAPITAL RESOURCES AND LIQUIDITY

Our consolidated operating cash flows vary with prices realized from copper, gold, molybdenum and oil sales, our sales volumes, production costs, income taxes, other working capital changes and other factors. During 2015, in response to weak market conditions, we took actions to enhance our financial position, including significant reductions in capital spending, production curtailments at certain North and South America mines and actions to reduce operating, exploration and administrative costs (refer to “Operations” for further discussion). In addition, we generated approximately $2 billion in gross proceeds from at-the-market equity programs, and our Board reduced our annual common stock dividend from $1.25 per share to $0.20 per share in March 2015, and subsequently suspended the annual common stock dividend in December 2015. Further weakening of commodity prices in early 2016, and the uncertainty about the timing of economic and commodity price recovery require us to continue taking actions to strengthen our financial position, reduce debt and re-focus our portfolio of assets. Our business strategy is focused on our position as a leading global copper producer. We will continue to manage our production activities, spending on capital projects and operations, and the administration of our business to enhance cash flows, and intend to complete significant asset sale transactions to reduce debt.

Cash

Following is a summary of the U.S. and international components of consolidated cash and cash equivalents, including cash available to the parent company, net of noncontrolling interests' share, taxes and other costs at December 31 (in millions):



	2015			2014
Cash at domestic companies	$	6		$	78
Cash at international operations	218			386
Total consolidated cash and cash equivalents	224			464
Less: noncontrolling interests’ share	(44		)	(91		)
Cash, net of noncontrolling interests’ share	180			373
Less: withholding taxes and other	(11		)	(16		)
Net cash available	$	169		$	357

Cash held at our international operations is generally used to support our foreign operations' capital expenditures, operating expenses, working capital and other tax payments or other cash needs. Management believes that sufficient liquidity is available in the U.S. from cash balances and availability from our revolving credit facility and uncommitted lines of credit (refer to Note 8). With the exception of TFM, we have not elected to permanently reinvest earnings from our foreign subsidiaries, and we have recorded deferred tax liabilities for foreign earnings that are available to be repatriated to the U.S. From time to time, our foreign subsidiaries distribute earnings to the U.S. through dividends that are subject to applicable withholding taxes and noncontrolling interests' share.

Debt

We continue to focus on cost and capital management and cash flow generation from our operations in the current weak commodity price environment and are taking further immediate actions to reduce debt by pursuing asset sales and joint venture transactions. Following is a summary of our total debt and related weighted-average interest rates at December 31 (in billions, except percentages):



	2015			2014
			Weighted-			Weighted-
			Average			Average
			Interest Rate			Interest Rate
FCX Senior Notes	$	11.9	3.8%	$	11.9	3.8%
FCX Term Loan	3.0		2.2%	3.0		1.7%
FM O&G LLC Senior Notes	2.5		6.6%	2.6		6.6%
Cerro Verde Credit Facility	1.8		2.8%	0.4		2.1%
Other FCX debt	1.2		3.9%	0.9		3.9%
Total debt	$	20.4	3.8%	$	18.8	3.8%

As of December 31, 2015, we had $36 million in letters of credit issued and availability of $4.0 billion under our credit facility.

In December 2015, we reached agreement with our bank group to amend the Leverage Ratio (Net Debt/EBITDA, as defined in the agreement) under our revolving credit facility and term loan from the previous limit. In addition, the amendment increased the interest rate spreads under specified conditions and requires prepayment of the term loan with 50 percent of the net proceeds of certain asset dispositions.

On February 26, 2016, we reached agreement with our bank group to amend our revolving credit facility and term loan. The changes pursuant to the revolving credit facility and the term loan included modifications of the maximum leverage ratio and minimum interest expense coverage ratio to provide us with additional flexibility, and the commitment under our revolving credit facility has been reduced by $500 million from $4.0 billion to $3.5 billion. A springing collateral and guarantee trigger was added to the revolving credit facility and term loan. Under this provision, if we have not entered into definitive agreements for asset sales totaling $3.0 billion in aggregate by June 30, 2016, that are reasonably expected to close by December 31, 2016, we will be required to secure the revolving credit facility and term loan with a mutually acceptable collateral and guarantee package. If such asset sales totaling $3.0 billion in aggregate have not occurred by December 31, 2016, then the springing collateral and guarantee trigger will go into effect.

Refer to Notes 8 and 18 for further discussion of our debt, include the modifications to our revolving credit facility and term loan.

Operating Activities

We generated consolidated operating cash flows totaling $3.2 billion in 2015 (including $0.4 billion in working capital sources and changes in other tax payments), $5.6 billion in 2014 (net of $0.6 billion for working capital uses and changes in other tax payments) and $6.1 billion in 2013 (net of $0.4 billion for working capital uses and changes in other tax payments).

Lower consolidated operating cash flows for 2015, compared with 2014, primarily reflects the impact of lower commodity price realizations, partly offset by an increase in working capital sources mostly associated with accounts receivable associated with settlements of oil and gas derivative contracts and inventories reflecting a decrease in volumes and lower average costs.

Lower consolidated operating cash flows for 2014, compared with 2013, reflect the impact of lower copper and gold price realizations and lower copper sales volumes, partly offset by a full year of our oil and gas operations.

Based on current operating plans and subject to future commodity prices for copper, gold, molybdenum and crude oil, we expect estimated consolidated operating cash flows for the year 2016, plus available cash and availability under our credit facility and uncommitted lines of credit, to be sufficient to fund our budgeted capital expenditures, scheduled debt maturities, noncontrolling interest distributions and other cash requirements for the year 2016. Refer to “Outlook” for further discussion of projected operating cash flows for the year 2016.

Investing Activities

Capital Expenditures. Capital expenditures, including capitalized interest, totaled $6.35 billion in 2015 (including $2.4 billion for major projects at mining operations and $3.0 billion for oil and gas operations), $7.2 billion in 2014 (including $2.9 billion for major projects at mining operations and $3.2 billion for oil and gas operations) and $5.3 billion in 2013 (including $2.3 billion for major projects at mining operations and $1.45 billion for oil and gas operations).

Lower capital expenditures in 2015, compared with 2014, primarily reflected decreased spending for major projects at mining operations, mostly resulting from the completion of the Morenci mill expansion (substantially completed in May 2014). Higher capital expenditures in 2014, compared with 2013, reflect increased capital expenditures at our oil and gas operations and increased spending for major projects at mining operations primarily associated with the expansion project at Cerro Verde.

Refer to "Outlook" for further discussion of projected capital expenditures for the year 2016.

Dispositions and Acquisitions. In November 2014, we completed the sale of our 80 percent ownership interests in the Candelaria and Ojos del Salado mines for $1.8 billion in cash (after-tax net proceeds of $1.5 billion).

In June 2014, we completed the sale of the Eagle Ford shale assets for cash consideration of $3.1 billion. Approximately $1.3 billion of the proceeds was placed in a like-kind exchange escrow to reinvest in additional oil and gas interests and the remaining net proceeds were used to repay debt. In June 2014 and September 2014, we completed acquisitions of Deepwater GOM interests totaling $1.4 billion.

In June 2013, we paid $3.5 billion in cash (net of cash acquired) for the acquisition of Plains Exploration & Production Company (PXP) and $1.6 billion in cash (net of cash acquired) for the acquisition of MMR.

In March 2013, we paid $348 million (net of cash acquired) for the acquisition of a cobalt chemical refinery in Kokkola, Finland, and the related sales and marketing business. The acquisition was funded 70 percent by us and 30 percent by Lundin, our joint venture partner.

Refer to Note 2 for further discussion of these dispositions and acquisitions.

Financing Activities

Debt Transactions. Net proceeds from debt in 2015 primarily include borrowings of $1.4 billion under Cerro Verde's nonrecourse senior unsecured credit facility to fund its expansion project.

During 2014, we completed the sale of $3.0 billion of senior notes, which were comprised of four tranches with a weighted-average interest rate of 4.1 percent. The proceeds from these senior notes were used to fund our December 2014 tender offers for $1.14 billion aggregate principal of senior notes (with a weighted-average interest rate of 6.5 percent), essentially all of our 2015 scheduled maturities (including scheduled term loan amortization and $500 million of 1.40% Senior Notes), $300 million in 7.625% Senior Notes, and to repay borrowings under our revolving credit facility. Other senior note redemptions during 2014 include $400 million of our 8.625% Senior Notes, $1.7 billion of the aggregate principal amount of certain senior notes (with a weighted-average interest rate of 6.6 percent) and $210 million of the aggregate principal amount of our 6.625% Senior Notes.

During 2013, we sold $6.5 billion of senior notes in four tranches with a weighted-average interest rate of 3.9 percent, and borrowed $4.0 billion under an unsecured bank term loan with an interest rate of London Interbank Offered Rate (LIBOR) plus 1.75 percent. Net proceeds from these borrowings were used to fund the acquisitions of PXP and MMR, repay certain debt of PXP and for general corporate purposes. Also in 2013, we redeemed the $299 million of MMR's outstanding 11.875% Senior Notes and $400 million of PXP's 75/8% Senior Notes, which were assumed in the acquisitions.

Refer to Note 8 for further discussion of these transactions.

Equity Transactions. Since August 2015 and through January 5, 2016, we sold 210 million shares of common stock, generating gross proceeds of approximately $2 billion under our at-the-market equity programs (including 206 million shares of common stock, generating gross proceeds of $1.96 billion during 2015). Net proceeds from the at-the-market equity programs were used for general corporate purposes, including the repayment of amounts outstanding under the revolving credit facility and other borrowings, and the financing of working capital and capital expenditures. Refer to Note 10 for further discussion.

During 2013, conversion of MMR's 8% Convertible Perpetual Preferred Stock and 5.75% Convertible Perpetual Preferred Stock, Series 1 required cash payments of $228 million. Refer to Note 2 for further discussion.

Dividends. We paid dividends on our common stock totaling $605 million in 2015 (including $115 million for special dividends of $0.1105 per share paid in accordance with the settlement terms of the shareholder derivative litigation), $1.3 billion in 2014 and $2.3 billion in 2013 (including $1.0 billion for a supplemental dividend of $1.00 per share paid in July 2013).

In March 2015, our Board reduced our annual common stock dividend from $1.25 per share to $0.20 per share, and in December 2015, our Board suspended the annual common stock dividend. These actions will provide annual cash savings of approximately $1.6 billion (based on outstanding common shares of 1.25 billion at December 31, 2015) and further enhance our liquidity during this period of weak market conditions. The declaration of dividends is

at the discretion of our Board and will depend upon our financial results, cash requirements, future prospects and other factors deemed relevant by our Board.

Cash dividends and other distributions paid to noncontrolling interests totaled $120 million in 2015, $424 million in 2014 and $256 million in 2013. These payments will vary based on the operating results and cash requirements of our consolidated subsidiaries.

CONTRACTUAL OBLIGATIONS

We have contractual and other long-term obligations, including debt maturities based on the principal amounts, which we expect to fund with available cash, projected operating cash flows, availability under our revolving credit facility or future financing transactions, if necessary. Following is summary of these various obligations at December 31, 2015 (in millions):



	Total		2016		2017 to 2018		2019 to 2020		Thereafter
Debt maturities	$	20,347	$	649	$	5,199	$	4,311	$	10,188
Scheduled interest payment obligationsa	7,258		760		1,428		1,155		3,915
ARO and environmental obligationsb	8,538		324		907		325		6,982
Take-or-pay contracts:
Mining operationsc	2,156		1,150		481		112		413
Oil and gas operationsd	1,773		1,035		615		54		69
Operating lease obligations	337		54		89		48		146
Totale	$	40,409	$	3,972	$	8,719	$	6,005	$	21,713


a.	Scheduled interest payment obligations were calculated using stated coupon rates for fixed-rate debt and interest rates applicable at December 31, 2015, for variable-rate debt.

Represents estimated cash payments, on an undiscounted and unescalated basis, associated with ARO and environmental activities (including $2.1 billion for our oil and gas operations). The timing and the amount of these payments could change as a result of changes in regulatory requirements, changes in scope and timing of ARO activities, the settlement of environmental matters and as actual spending occurs. Refer to Note 12 for additional discussion of environmental and ARO matters.

Represents contractual obligations for purchases of goods or services agreements enforceable and legally binding and that specify all significant terms including the procurement of copper concentrate ($854 million), electricity ($601 million) and transportation services ($450 million). Some of our take-or-pay contracts are settled based on the prevailing market rate for the service or commodity purchased, and in some cases, the amount of the actual obligation may change over time because of market conditions. Obligations for copper concentrate provide for deliveries of specified volumes to Atlantic Copper at market-based prices. Electricity obligations are primarily for contractual minimum demand at the South America mines. Transportation obligations are primarily for South America contracted ocean freight.

Represents contractual obligations for purchases of goods or service agreements enforceable and legally binding and that specify all significant terms, including minimum commitments for Deepwater GOM drillships ($1.2 billion) and transportation services ($221 million). Drillship obligations provide for an operating rate over the contractual term. Transportation obligations are primarily for FM O&G contracted rates for natural gas and crude oil gathering systems.

This table excludes certain other obligations in our consolidated balance sheets, such as estimated funding for pension, postretirement and other employee benefit obligations as the funding may vary from year to year based on changes in the fair value of plan assets and actuarial assumptions, commitments and contingencies totaling $101 million and unrecognized tax benefits totaling $152 million where the timing of settlement is not determinable, and other less significant amounts. This table also excludes purchase orders for the purchase of inventory and other goods and services, as purchase orders typically represent authorizations to purchase rather than binding agreements.

In addition to our debt maturities and other contractual obligations discussed above, we have other commitments, which we expect to fund with available cash, projected operating cash flows, available credit facilities or future financing transactions, if necessary. These include (i) PT-FI's commitment to provide one percent of its annual revenue for the development of the local people in its area of operations through the Freeport Partnership Fund for Community Development, (ii) TFM's commitment to provide 0.3 percent of net sales revenue from production for the development of the local people in its area of operations, (iii) Cerro Verde's scheduled installment payments for disputed mining royalty assessments and (iv) other commercial commitments, including standby letters of credit, surety bonds and guarantees. Refer to Notes 12 and 13 for further discussion.

CONTINGENCIES

Environmental

The cost of complying with environmental laws is a fundamental and substantial cost of our business. At December 31, 2015, we had $1.2 billion recorded in our consolidated balance sheet for environmental obligations attributed to CERCLA or analogous state programs and for estimated future costs associated with environmental obligations that are considered probable based on specific facts and circumstances.

During 2015, we incurred environmental capital expenditures and other environmental costs (including our joint venture partners’ shares) of $421 million for programs primarily to comply with applicable environmental laws and regulations that affect our operations, compared with $405 million in 2014 and $595 million in 2013. Higher costs in 2013 primarily reflect the completion of a water treatment facility at one of our molybdenum mines.

For 2016, we expect to incur approximately $495 million of aggregate environmental capital expenditures and other environmental costs, which are part of our overall 2016 operating budget. The timing and amount of estimated payments could change as a result of changes in regulatory requirements, changes in scope and timing of reclamation activities, the settlement of environmental matters and as actual spending occurs.

Refer to Note 12 and "Risk Factors" contained in Part I, Item 1A. of our annual report on Form 10-K for the year ended December 31, 2015, for further information about environmental regulation, including significant environmental matters.

Asset Retirement Obligations

We recognize AROs as liabilities when incurred, with the initial measurement at fair value. These obligations, which are initially estimated based on discounted cash flow estimates, are accreted to full value over time through charges to cost of sales. Mine reclamation costs for disturbances are recorded as an ARO and as a related asset retirement cost (ARC) (included in property, plant, equipment and development costs) in the period of disturbance. Oil and gas plugging and abandonment costs are recognized as an ARO and as a related ARC (included in oil and gas properties) in the period in which the well is drilled or acquired. Our cost estimates are reflected on a third-party cost basis and comply with our legal obligation to retire tangible, long-lived assets. At December 31, 2015, we had $2.8 billion recorded in our consolidated balance sheet for AROs, including $1.1 billion related to our oil and gas properties. Spending on AROs totaled $133 million in 2015, $99 million in 2014 and $107 million in 2013 (including $92 million in 2015, $74 million in 2014 and $64 million in 2013 for our oil and gas operations). For 2016, we expect to incur approximately $172 million for aggregate ARO payments. Refer to Note 12 for further discussion.

Litigation and Other Contingencies

Refer to Notes 2 and 12 and "Legal Proceedings" contained in Part I, Item 3. of our annual report on Form 10-K for the year ended December 31, 2015, for further discussion of contingencies associated with legal proceedings and other matters.

DISCLOSURES ABOUT MARKET RISKS

Commodity Price Risk

Metals. Our consolidated revenues from our mining operations include the sale of copper concentrate, copper cathode, copper rod, gold, molybdenum and other metals by our North and South America mines, the sale of copper concentrate (which also contains significant quantities of gold and silver) by our Indonesia mining operations, the sale of copper cathode and cobalt hydroxide by our Africa mining operations, the sale of molybdenum in various forms by our molybdenum operations, and the sale of copper cathode, copper anode and gold in anode and slimes by Atlantic Copper. Our financial results can vary significantly as a result of fluctuations in the market prices of copper, gold, molybdenum, silver and cobalt. For projected sensitivities of our operating cash flow to changes in commodity prices, refer to "Outlook." World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control. Refer to "Risk Factors" contained in Part I, Item 1A. of our annual report on Form 10-K for the year ended December 31, 2015, for further discussion of financial risks associated with fluctuations in the market prices of the commodities we sell.

For 2015, 43 percent of our mined copper was sold in concentrate, 33 percent as cathode and 24 percent as rod from North America operations. Substantially all of our copper concentrate and cathode sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) based primarily on quoted LME monthly average spot copper prices. We receive market prices based on prices in the specified future

period, which results in price fluctuations recorded through revenues until the date of settlement. We record revenues and invoice customers at the time of shipment based on then-current LME prices, which results in an embedded derivative on our provisionally priced concentrate and cathode sales that is adjusted to fair value through earnings each period, using the period-end forward prices, until final pricing on the date of settlement. To the extent final prices are higher or lower than what was recorded on a provisional basis, an increase or decrease to revenues is recorded each reporting period until the date of final pricing. Accordingly, in times of rising copper prices, our revenues benefit from adjustments to the final pricing of provisionally priced sales pursuant to contracts entered into in prior periods; in times of falling copper prices, the opposite occurs.

Following are the unfavorable impacts of net adjustments to the prior years' provisionally priced copper sales for the years ended December 31 (in millions, except per share amounts):



	2015			2014			2013
Revenues	$	(107	)	$	(118	)	$	(26	)
Net income attributable to common stockholders	$	(53	)	$	(65	)	$	(12	)
Net income per share attributable to common stockholders	$	(0.05	)	$	(0.06	)	$	(0.01	)

At December 31, 2015, we had provisionally priced copper sales at our copper mining operations totaling 515 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average price of $2.13 per pound, subject to final pricing over the next several months. We estimate that each $0.05 change in the price realized from the December 31, 2015, provisional price recorded would have an approximate $19 million effect on 2016 net income attributable to common stockholders. The LME spot copper price closed at $2.08 per pound on February 19, 2016.

Oil & Gas. Our financial results from oil and gas operations vary with fluctuations in crude oil prices and, to a lesser extent natural gas prices. Market prices for crude oil and natural gas have fluctuated historically and are affected by numerous factors beyond our control. Refer to "Risk Factors" contained in Part 1, Item 1A. of our annual report on Form 10-K for the year ended December 31, 2015, for further discussion of financial risks associated with fluctuations in the market prices of the commodities we sell.

Foreign Currency Exchange Risk

The functional currency for most of our operations is the U.S. dollar. Substantially all of our revenues and a significant portion of our costs are denominated in U.S. dollars; however, some costs and certain asset and liability accounts are denominated in local currencies, including the Indonesian rupiah, Australian dollar, Chilean peso, Peruvian sol and euro. We recognized foreign currency translation losses on balances denominated in foreign currencies totaling $93 million in 2015, $4 million in 2014 and $36 million in 2013, primarily at our Indonesia and South America mines. Generally, our operating results are positively affected when the U.S. dollar strengthens in relation to those foreign currencies and adversely affected when the U.S. dollar weakens in relation to those foreign currencies.

Following is a summary of estimated annual payments and the impact of changes in foreign currency rates on our annual operating costs:



	Exchange Rate per $1 at December 31,			Estimated Annual Payments			10% Change in Exchange Rate (in millions)a
	2015	2014	2013	(in local currency)	(in millions)b		Increase			Decrease
Indonesia
Rupiah	13,726	12,378	12,128	8.8 trillion	$	641	$	(58	)	$	71
Australian dollar	1.37	1.22	1.12	200 million	$	146	$	(13	)	$	15
South America
Chilean peso	710	607	525	155 billion	$	218	$	(20	)	$	25
Peruvian sol	3.41	2.99	2.80	835 million	$	244	$	(22	)	$	27
Atlantic Copper
Euro	0.92	0.82	0.73	135 million	$	147	$	(13	)	$	15


a.	Reflects the estimated impact on annual operating costs assuming a 10 percent increase or decrease in the exchange rate reported at December 31, 2015.


b.	Based on December 31, 2015, exchange rates.

Interest Rate Risk

At December 31, 2015, we had total debt maturities based on the principal amounts of $20.3 billion, of which approximately 32 percent was variable-rate debt with interest rates based on the LIBOR or the Euro Interbank Offered Rate. The table below presents average interest rates for our scheduled maturities of principal for our outstanding debt (excluding fair value adjustments) and the related fair values at December 31, 2015 (in millions, except percentages):



	2016			2017			2018			2019			2020			Thereafter			Fair Value
Fixed-rate debt	$	3		$	1,251		$	1,500		$	237		$	1,618		$	10,084		$	9,473
Average interest rate	1.4		%	2.2		%	2.4		%	6.1		%	4.4		%	4.9		%	4.4		%

Variable-rate debt	$	646		$	542		$	1,906		$	1,202		$	1,254		$	104		$	4,514
Average interest rate	1.6		%	2.5		%	2.5		%	2.8		%	2.2		%	4.3		%	2.4		%

NEW ACCOUNTING STANDARDS

We do not expect the provisions of recently issued accounting standards to have a significant impact on our future financial statements and disclosures. Refer to Note 1 for further discussion.

OFF-BALANCE SHEET ARRANGEMENTS

Refer to Note 13 for discussion of off-balance sheet arrangements.

PRODUCT REVENUES AND PRODUCTION COSTS

Mining Product Revenues and Unit Net Cash Costs

Unit net cash costs per pound of copper and molybdenum are measures intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for the respective operations. We use this measure for the same purpose and for monitoring operating performance by our mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measures may not be comparable to similarly titled measures reported by other companies.

We present gross profit per pound of copper in the following tables using both a “by-product” method and a “co-product” method. We use the by-product method in our presentation of gross profit per pound of copper because (i) the majority of our revenues are copper revenues, (ii) we mine ore, which contains copper, gold, molybdenum and other metals, (iii) it is not possible to specifically assign all of our costs to revenues from the copper, gold, molybdenum and other metals we produce, (iv) it is the method used to compare mining operations in certain industry publications and (v) it is the method used by our management and the Board to monitor operations. In the co-product method presentation below, shared costs are allocated to the different products based on their relative revenue values, which will vary to the extent our metals sales volumes and realized prices change.

We show revenue adjustments for prior period open sales as separate line items. Because these adjustments do not result from current period sales, we have reflected these separately from revenues on current period sales. Noncash and other costs consist of items such as stock-based compensation costs, start-up costs, inventory adjustments, long-lived asset impairments, restructuring, write-offs of equipment and/or unusual charges, which are removed from site production and delivery costs in the calculation of unit net cash costs. As discussed above, gold, molybdenum and other metal revenues at copper mines are reflected as credits against site production and delivery costs in the by-product method. The following schedules for our mining operations are presentations under both the by-product and co-product methods together with reconciliations to amounts reported in our consolidated financial statements.

Oil and Gas Product Revenues and Cash Production Costs per Unit

Realized revenues and cash production costs per unit are measures intended to provide investors with information about the cash operating margin of our oil and gas operations expressed on a basis relating to each product sold. We use this measure for the same purpose and for monitoring operating performance by our oil and gas operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. Our measures may not be comparable to similarly titled measures reported by other companies.

We show revenue adjustments from derivative contracts as separate line items. Because these adjustments do not result from oil and gas sales, these gains and losses have been reflected separately from revenues on current period sales. Additionally, accretion, charges for asset retirement obligations and other costs, such as idle/terminated rig costs, inventory write-downs and/or unusual charges, are removed from production and delivery costs in the calculation of cash production costs per BOE. The following schedules include calculations of oil and gas product revenues and cash production costs together with a reconciliation to amounts reported in our consolidated financial statements.

North America Copper Mines Product Revenues and Production Costs



Year Ended December 31, 2015
(In millions)	By-Product				Co-Product Method
	Method				Copper				Molybdenuma		Otherb		Total
Revenues, excluding adjustments	$	4,907			$	4,907			$	261	$	102	$	5,270
Site production and delivery, before net noncash
and other costs shown below	3,339				3,161				209		71		3,441
By-product credits	(261		)		—				—		—		—
Treatment charges	240				233				—		7		240
Net cash costs	3,318				3,394				209		78		3,681
Depreciation, depletion and amortization	558				528				20		10		558
Copper and molybdenum inventory adjustments	142				139				2		1		142
Noncash and other costs, net	233			c	225				6		2		233
Total costs	4,251				4,286				237		91		4,614
Revenue adjustments, primarily for pricing on prior period open sales	(28		)		(28		)		—		—		(28		)
Gross profit	$	628			$	593			$	24	$	11	$	628

Copper sales (millions of recoverable pounds)	1,985				1,985
Molybdenum sales (millions of recoverable pounds)a									37

Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments	$	2.47			$	2.47			$	7.02
Site production and delivery, before net noncash
and other costs shown below	1.68				1.59				5.61
By-product credits	(0.13		)		—				—
Treatment charges	0.12				0.12				—
Unit net cash costs	1.67				1.71				5.61
Depreciation, depletion and amortization	0.28				0.27				0.53
Copper and molybdenum inventory adjustments	0.07				0.07				0.07
Noncash and other costs, net	0.12			c	0.11				0.16
Total unit costs	2.14				2.16				6.37
Revenue adjustments, primarily for pricing
on prior period open sales	(0.01		)		(0.01		)		—
Gross profit per pound	$	0.32			$	0.30			$	0.65

Reconciliation to Amounts Reported											Copper and
(In millions)									Depreciation,		Molybdenum
					Production				Depletion and		Inventory
	Revenues				and Delivery				Amortization		Adjustments
Totals presented above	$	5,270			$	3,441			$	558	$	142
Treatment charges	—				240				—		—
Noncash and other costs, net	—				233			c	—		—
Revenue adjustments, primarily for pricing on prior period open sales	(28		)		—				—		—
Eliminations and other	(116		)		(115		)		2		—
North America copper mines	5,126				3,799				560		142
Other mining & eliminationsd	8,756				6,536				1,119		196
Total mining	13,882				10,335				1,679		338
U.S. oil & gas operations	1,994				1,211				1,804		—
Corporate, other & eliminations	1				(1		)		14		—
As reported in FCX’s consolidated financial statements	$	15,877			$	11,545			$	3,497	$	338


a.	Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing.


b.	Includes gold and silver product revenues and production costs.


c.	Includes $99 million ($0.05 per pound) for impairment, restructuring charges and other net charges.


d.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

North America Copper Mines Product Revenues and Production Costs (continued)



Year Ended December 31, 2014
(In millions)	By-Product			Co-Product Method
	Method			Copper			Molybdenuma		Otherb		Total
Revenues, excluding adjustments	$	5,186		$	5,186		$	386	$	120	$	5,692
Site production and delivery, before net noncash
and other costs shown below	3,057			2,860			226		78		3,164
By-product credits	(399		)	—			—		—		—
Treatment charges	203			198			—		5		203
Net cash costs	2,861			3,058			226		83		3,367
Depreciation, depletion and amortization	473			448			19		6		473
Noncash and other costs, net	149			146			2		1		149
Total costs	3,483			3,652			247		90		3,989
Revenue adjustments, primarily for pricing on prior period open sales	(7		)	(7		)	—		—		(7		)
Gross profit	$	1,696		$	1,527		$	139	$	30	$	1,696

Copper sales (millions of recoverable pounds)	1,657			1,657
Molybdenum sales (millions of recoverable pounds)a							33

Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments	$	3.13		$	3.13		$	11.74
Site production and delivery, before net noncash
and other costs shown below	1.85			1.73			6.85
By-product credits	(0.24		)	—			—
Treatment charges	0.12			0.12			—
Unit net cash costs	1.73			1.85			6.85
Depreciation, depletion and amortization	0.29			0.27			0.60
Noncash and other costs, net	0.09			0.09			0.07
Total unit costs	2.11			2.21			7.52
Revenue adjustments, primarily for pricing
on prior period open sales	—			—			—
Gross profit per pound	$	1.02		$	0.92		$	4.22

Reconciliation to Amounts Reported
(In millions)							Depreciation,
				Production			Depletion and
	Revenues			and Delivery			Amortization
Totals presented above	$	5,692		$	3,164		$	473
Treatment charges	—			203			—
Noncash and other costs, net	—			149			—
Revenue adjustments, primarily for pricing on prior period open sales	(7		)	—			—
Eliminations and other	(69		)	(76		)	11
North America copper mines	5,616			3,440			484
Other mining & eliminationsc	11,112			7,219			1,074
Total mining	16,728			10,659			1,558
U.S. oil & gas operations	4,710			1,237			2,291
Corporate, other & eliminations	—			2			14
As reported in FCX’s consolidated financial statements	$	21,438		$	11,898		$	3,863


a.	Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing.


b.	Includes gold and silver product revenues and production costs.


c.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

North America Copper Mines Product Revenues and Production Costs (continued)



Year Ended December 31, 2013
(In millions)	By-Product				Co-Product Method
	Method				Copper				Molybdenuma		Otherb		Total
Revenues, excluding adjustments	$	4,752			$	4,752			$	349	$	106	$	5,207
Site production and delivery, before net noncash
and other costs shown below	2,828				2,744				123		74		2,941
By-product credits	(342		)		—				—		—		—
Treatment charges	155				151				—		4		155
Net cash costs	2,641				2,895				123		78		3,096
Depreciation, depletion and amortization	391				378				7		6		391
Noncash and other costs, net	202			c	200				1		1		202
Total costs	3,234				3,473				131		85		3,689
Revenue adjustments, primarily for pricing on prior period open sales	(4		)		(4		)		—		—		(4		)
Gross profit	$	1,514			$	1,275			$	218	$	21	$	1,514

Copper sales (millions of recoverable pounds)	1,416				1,416
Molybdenum sales (millions of recoverable pounds)a									32

Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments	$	3.36			$	3.36			$	10.79
Site production and delivery, before net noncash
and other costs shown below	2.00				1.94				3.79
By-product credits	(0.24		)		—				—
Treatment charges	0.11				0.11				—
Unit net cash costs	1.87				2.05				3.79
Depreciation, depletion and amortization	0.28				0.27				0.22
Noncash and other costs, net	0.14			c	0.14				0.04
Total unit costs	2.29				2.46				4.05
Revenue adjustments, primarily for pricing
on prior period open sales	—				—				—
Gross profit per pound	$	1.07			$	0.90			$	6.74

Reconciliation to Amounts Reported
(In millions)									Depreciation,
					Production				Depletion and
	Revenues				and Delivery				Amortization
Totals presented above	$	5,207			$	2,941			$	391
Treatment charges	—				155				—
Noncash and other costs, net	—				202			c	—
Revenue adjustments, primarily for pricing on prior period open sales	(4		)		—				—
Eliminations and other	(20		)		(32		)		11
North America copper mines	5,183				3,266				402
Other mining & eliminationsd	13,118				7,882				1,020
Total mining	18,301				11,148				1,422
U.S. oil & gas operations	2,616				682				1,364
Corporate, other & eliminations	4				7				11
As reported in FCX’s consolidated financial statements	$	20,921			$	11,837			$	2,797


a.	Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing.


b.	Includes gold and silver product revenues and production costs.


c.	Includes $76 million ($0.05 per pound) associated with updated mine plans at Morenci that resulted in a loss in recoverable copper in leach stockpiles.


d.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

South America Mining Product Revenues and Production Costs



Year Ended December 31, 2015
(In millions)	By-Product			Co-Product Method
	Method			Copper			Othera			Total
Revenues, excluding adjustments	$	2,075		$	2,075		$	65		$	2,140
Site production and delivery, before net noncash
and other costs shown below	1,393			1,355			59			1,414
By-product credits	(44		)	—			—			—
Treatment charges	161			161			—			161
Royalty on metals	4			4			—			4
Net cash costs	1,514			1,520			59			1,579
Depreciation, depletion and amortization	352			341			11			352
Copper inventory adjustments	73			73			—			73
Noncash and other costs, net	41			41			—			41
Total costs	1,980			1,975			70			2,045
Revenue adjustments, primarily for pricing on prior period open sales	(28		)	(28		)	—			(28		)
Gross profit (loss)	$	67		$	72		$	(5	)	$	67

Copper sales (millions of recoverable pounds)	871			871

Gross profit per pound of copper:

Revenues, excluding adjustments	$	2.38		$	2.38
Site production and delivery, before net noncash
and other costs shown below	1.60			1.56
By-product credits	(0.05		)	—
Treatment charges	0.19			0.19
Royalty on metals	—			—
Unit net cash costs	1.74			1.75
Depreciation, depletion and amortization	0.40			0.39
Copper inventory adjustments	0.08			0.08
Noncash and other costs, net	0.05			0.05
Total unit costs	2.27			2.27
Revenue adjustments, primarily for pricing
on prior period open sales	(0.03		)	(0.03		)
Gross profit per pound	$	0.08		$	0.08

Reconciliation to Amounts Reported										Copper and
(In millions)							Depreciation,			Molybdenum
				Production			Depletion and			Inventory
	Revenues			and Delivery			Amortization			Adjustments
Totals presented above	$	2,140		$	1,414		$	352		$	73
Treatment charges	(161		)	—			—			—
Royalty on metals	(4		)	—			—			—
Noncash and other costs, net	—			41			—			—
Revenue adjustments, primarily for pricing on prior period open sales	(28		)	—			—			—
Eliminations and other	(13		)	(17		)	—			—
South America mining	1,934			1,438			352			73
Other mining & eliminationsb	11,948			8,897			1,327			265
Total mining	13,882			10,335			1,679			338
U.S. oil & gas operations	1,994			1,211			1,804			—
Corporate, other & eliminations	1			(1		)	14			—
As reported in FCX’s consolidated financial statements	$	15,877		$	11,545		$	3,497		$	338


a.	Includes silver sales of 2.0 million ounces ($14.48 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.


b.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

South America Mining Product Revenues and Production Costs (continued)



Year Ended December 31, 2014
(In millions)	By-Product				Co-Product Method
	Method				Copper			Othera		Total
Revenues, excluding adjustments	$	3,498			$	3,498		$	269	$	3,767
Site production and delivery, before net noncash
and other costs shown below	1,839				1,710			151		1,861
By-product credits	(247		)		—			—		—
Treatment charges	191				191			—		191
Royalty on metals	6				5			1		6
Net cash costs	1,789			b	1,906			152		2,058
Depreciation, depletion and amortization	367				345			22		367
Noncash and other costs, net	67				64			3		67
Total costs	2,223				2,315			177		2,492
Revenue adjustments, primarily for pricing on prior period open sales	(65		)		(65		)	—		(65		)
Gross profit	$	1,210			$	1,118		$	92	$	1,210

Copper sales (millions of recoverable pounds)	1,135			b	1,135

Gross profit per pound of copper:

Revenues, excluding adjustments	$	3.08			$	3.08
Site production and delivery, before net noncash
and other costs shown below	1.62				1.51
By-product credits	(0.22		)		—
Treatment charges	0.17				0.17
Royalty on metals	0.01				—
Unit net cash costs	1.58			b	1.68
Depreciation, depletion and amortization	0.32				0.31
Noncash and other costs, net	0.06				0.06
Total unit costs	1.96				2.05
Revenue adjustments, primarily for pricing
on prior period open sales	(0.05		)		(0.05		)
Gross profit per pound	$	1.07			$	0.98

Reconciliation to Amounts Reported
(In millions)								Depreciation,
					Production			Depletion and
	Revenues				and Delivery			Amortization
Totals presented above	$	3,767			$	1,861		$	367
Treatment charges	(191		)		—			—
Royalty on metals	(6		)		—			—
Noncash and other costs, net	—				67			—
Revenue adjustments, primarily for pricing on prior period open sales	(65		)		—			—
Eliminations and other	27				11			—
South America mining	3,532				1,939			367
Other mining & eliminationsc	13,196				8,720			1,191
Total mining	16,728				10,659			1,558
U.S. oil & gas operations	4,710				1,237			2,291
Corporate, other & eliminations	—				2			14
As reported in FCX’s consolidated financial statements	$	21,438			$	11,898		$	3,863


a.	Includes gold sales of 67 thousand ounces ($1,271 per ounce average realized price) and silver sales of 2.9 million ounces ($18.54 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.

b.Following is a reconciliation of South America mining's 2014 unit net cash costs, excluding the Candelaria and Ojos del Salado mines:



	Net Cash Costs (in millions)		Copper Sales (millions of recoverable pounds)	Unit Net Cash Costs (per pound of copper)
Presented above	$	1,789	1,135	$	1.58
Less: Candelaria and Ojos del Salado mines	425		268
	$	1,364	867	$	1.57


c.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

South America Mining Product Revenues and Production Costs (continued)



Year Ended December 31, 2013
(In millions)	By-Product				Co-Product Method
	Method				Copper				Othera		Total
Revenues, excluding adjustments	$	4,366			$	4,366			$	374	$	4,740
Site production and delivery, before net noncash
and other costs shown below	2,023			b	1,875				170		2,045
By-product credits	(352		)		—				—		—
Treatment charges	226				226				—		226
Net cash costs	1,897			c	2,101				170		2,271
Depreciation, depletion and amortization	346				323				23		346
Noncash and other costs, net	49				44				5		49
Total costs	2,292				2,468				198		2,666
Revenue adjustments, primarily for pricing on prior period open sales	(28		)		(28		)		—		(28		)
Gross profit	$	2,046			$	1,870			$	176	$	2,046

Copper sales (millions of recoverable pounds)	1,325			c	1,325

Gross profit per pound of copper:

Revenues, excluding adjustments	$	3.30			$	3.30
Site production and delivery, before net noncash
and other costs shown below	1.53			b	1.42
By-product credits	(0.27		)		—
Treatment charges	0.17				0.17
Unit net cash costs	1.43			c	1.59
Depreciation, depletion and amortization	0.26				0.24
Noncash and other costs, net	0.04				0.03
Total unit costs	1.73				1.86
Revenue adjustments, primarily for pricing
on prior period open sales	(0.03		)		(0.03		)
Gross profit per pound	$	1.54			$	1.41

Reconciliation to Amounts Reported
(In millions)									Depreciation,
					Production				Depletion and
	Revenues				and Delivery				Amortization
Totals presented above	$	4,740			$	2,045		b	$	346
Treatment charges	(226		)		—				—
Noncash and other costs, net	—				49				—
Revenue adjustments, primarily for pricing on prior period open sales	(28		)		—				—
Eliminations and other	(1		)		(25		)		—
South America mining	4,485				2,069				346
Other mining & eliminationsd	13,816				9,079				1,076
Total mining	18,301				11,148				1,422
U.S. oil & gas operations	2,616				682				1,364
Corporate, other & eliminations	4				7				11
As reported in FCX’s consolidated financial statements	$	20,921			$	11,837			$	2,797


a.	Includes gold sales of 102 thousand ounces ($1,350 per ounce average realized price) and silver sales of 4.1 million ounces ($21.88 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.


b.	Includes $36 million ($0.03 per pound) associated with labor agreement costs at Cerro Verde.

c.Following is a reconciliation of South America mining's 2014 unit net cash costs, excluding the Candelaria and Ojos del Salado mines:



	Net Cash Costs (in millions)		Copper Sales (millions of recoverable pounds)	Unit Net Cash Costs (per pound of copper)
Presented above	$	1,897	1,325	$	1.43
Less: Candelaria and Ojos del Salado	564		424
	$	1,333	901	$	1.48


d.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

Indonesia Mining Product Revenues and Production Costs



Year Ended December 31, 2015
(In millions)	By-Product			Co-Product Method
	Method			Copper			Gold		Silvera		Total
Revenues, excluding adjustments	$	1,735		$	1,735		$	1,382	$	31	$	3,148
Site production and delivery, before net noncash
and other costs shown below	1,780			981			781		18		1,780
Gold and silver credits	(1,422		)	—			—		—		—
Treatment charges	231			127			101		3		231
Export duties	109			60			48		1		109
Royalty on metals	114			63			50		1		114
Net cash costs	812			1,231			980		23		2,234
Depreciation and amortization	293			161			129		3		293
Noncash and other costs, net	38			21			17		—		38
Total costs	1,143			1,413			1,126		26		2,565
Revenue adjustments, primarily for pricing on prior period open sales	(50		)	(50		)	8		1		(41		)
PT Smelting intercompany profit	10			5			5		—		10
Gross profit	$	552		$	277		$	269	$	6	$	552

Copper sales (millions of recoverable pounds)	744			744
Gold sales (thousands of recoverable ounces)							1,224

Gross profit per pound of copper/per ounce of gold:

Revenues, excluding adjustments	$	2.33		$	2.33		$	1,129
Site production and delivery, before net noncash
and other costs shown below	2.39			1.32			638
Gold and silver credits	(1.91		)	—			—
Treatment charges	0.31			0.17			83
Export duties	0.15			0.08			39
Royalty on metals	0.15			0.09			41
Unit net cash costs	1.09			1.66			801
Depreciation and amortization	0.39			0.22			105
Noncash and other costs, net	0.05			0.03			14
Total unit costs	1.53			1.91			920
Revenue adjustments, primarily for pricing
on prior period open sales	(0.07		)	(0.06		)	7
PT Smelting intercompany profit	0.01			0.01			4
Gross profit per pound/ounce	$	0.74		$	0.37		$	220

Reconciliation to Amounts Reported
(In millions)							Depreciation,
				Production			Depletion and
	Revenues			and Delivery			Amortization
Totals presented above	$	3,148		$	1,780		$	293
Treatment charges	(231		)	—			—
Export duties	(109		)	—			—
Royalty on metals	(114		)	—			—
Noncash and other costs, net	—			38			—
Revenue adjustments, primarily for pricing on prior period open sales	(41		)	—			—
PT Smelting intercompany profit	—			(10		)	—
Indonesia mining	2,653			1,808			293
Other mining & eliminationsb	11,229			8,527			1,386
Total mining	13,882			10,335			1,679
U.S. oil & gas operations	1,994			1,211			1,804
Corporate, other & eliminations	1			(1		)	14
As reported in FCX’s consolidated financial statements	$	15,877		$	11,545		$	3,497

a.Includes silver sales of 2.1 million ounces ($14.81 per ounce average realized price).


b.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

Indonesia Mining Product Revenues and Production Costs (continued)



Year Ended December 31, 2014
(In millions)	By-Product				Co-Product Method
	Method				Copper				Gold		Silvera		Total
Revenues, excluding adjustments	$	1,998			$	1,998			$	1,434	$	39	$	3,471
Site production and delivery, before net noncash
and other costs shown below	1,831				1,054				757		20		1,831
Gold and silver credits	(1,491		)		—				—		—		—
Treatment charges	171				99				70		2		171
Export duties	77				44				32		1		77
Royalty on metals	115				66				48		1		115
Net cash costs	703				1,263				907		24		2,194
Depreciation and amortization	266				153				110		3		266
Noncash and other costs, net	191			b	110				79		2		191
Total costs	1,160				1,526				1,096		29		2,651
Revenue adjustments, primarily for pricing on prior period open sales	(55		)		(55		)		18		—		(37		)
PT Smelting intercompany profit	34				20				14		—		34
Gross profit	$	817			$	437			$	370	$	10	$	817

Copper sales (millions of recoverable pounds)	664				664
Gold sales (thousands of recoverable ounces)									1,168

Gross profit per pound of copper/per ounce of gold:

Revenues, excluding adjustments	$	3.01			$	3.01			$	1,229
Site production and delivery, before net noncash
and other costs shown below	2.76				1.59				648
Gold and silver credits	(2.25		)		—				—
Treatment charges	0.26				0.15				61
Export duties	0.12				0.06				27
Royalty on metals	0.17				0.10				41
Unit net cash costs	1.06				1.90				777
Depreciation and amortization	0.40				0.23				94
Noncash and other costs, net	0.29			b	0.17				68
Total unit costs	1.75				2.30				939
Revenue adjustments, primarily for pricing
on prior period open sales	(0.08		)		(0.08		)		15
PT Smelting intercompany profit	0.05				0.03				12
Gross profit per pound/ounce	$	1.23			$	0.66			$	317

Reconciliation to Amounts Reported
(In millions)									Depreciation,
					Production				Depletion and
	Revenues				and Delivery				Amortization
Totals presented above	$	3,471			$	1,831			$	266
Treatment charges	(171		)		—				—
Export duties	(77		)		—				—
Royalty on metals	(115		)		—				—
Noncash and other costs, net	—				191			b	—
Revenue adjustments, primarily for pricing on prior period open sales	(37		)		—				—
PT Smelting intercompany profit	—				(34		)		—
Indonesia mining	3,071				1,988				266
Other mining & eliminationsc	13,657				8,671				1,292
Total mining	16,728				10,659				1,558
U.S. oil & gas operations	4,710				1,237				2,291
Corporate, other & eliminations	—				2				14
As reported in FCX’s consolidated financial statements	$	21,438			$	11,898			$	3,863


a.	Includes silver sales of 2.2 million ounces ($17.42 per ounce average realized price).


b.	Includes $143 million ($0.22 per pound) of fixed costs charged directly to cost of sales as a result of the impact of export restrictions on PT-FI's operating rates.


c.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

Indonesia Mining Product Revenues and Production Costs (continued)



Year Ended December 31, 2013
(In millions)	By-Product			Co-Product Method
	Method			Copper			Gold			Silvera			Total
Revenues, excluding adjustments	$	2,903		$	2,903		$	1,438		$	61		$	4,402
Site production and delivery, before net noncash
and other costs shown below	2,174			1,434			710			30			2,174
Gold and silver credits	(1,497		)	—			—			—			—
Treatment charges	205			135			67			3			205
Royalty on metals	109			72			36			1			109
Net cash costs	991			1,641			813			34			2,488
Depreciation and amortization	247			163			80			4			247
Noncash and other costs, net	116			77			38			1			116
Total costs	1,354			1,881			931			39			2,851
Revenue adjustments, primarily for pricing on prior period open sales	1			1			(2		)	—			(1		)
PT Smelting intercompany loss	(19		)	(12		)	(6		)	(1		)	(19		)
Gross profit	$	1,531		$	1,011		$	499		$	21		$	1,531

Copper sales (millions of recoverable pounds)	885			885
Gold sales (thousands of recoverable ounces)							1,096

Gross profit per pound of copper/per ounce of gold:

Revenues, excluding adjustments	$	3.28		$	3.28		$	1,312
Site production and delivery, before net noncash
and other costs shown below	2.46			1.62			648
Gold and silver credits	(1.69		)	—			—
Treatment charges	0.23			0.15			61
Royalty on metals	0.12			0.08			33
Unit net cash costs	1.12			1.85			742
Depreciation and amortization	0.28			0.19			73
Noncash and other costs, net	0.13			0.09			35
Total unit costs	1.53			2.13			850
Revenue adjustments, primarily for pricing
on prior period open sales	—			—			(1		)
PT Smelting intercompany loss	(0.02		)	(0.01		)	(6		)
Gross profit per pound/ounce	$	1.73		$	1.14		$	455

Reconciliation to Amounts Reported
(In millions)							Depreciation,
				Production			Depletion and
	Revenues			and Delivery			Amortization
Totals presented above	$	4,402		$	2,174		$	247
Treatment charges	(205		)	—			—
Royalty on metals	(109		)	—			—
Noncash and other costs, net	—			116			—
Revenue adjustments, primarily for pricing on prior period open sales	(1		)	—			—
PT Smelting intercompany loss	—			19			—
Indonesia mining	4,087			2,309			247
Other mining & eliminationsb	14,214			8,839			1,175
Total mining	18,301			11,148			1,422
U.S. oil & gas operations	2,616			682			1,364
Corporate, other & eliminations	4			7			11
As reported in FCX’s consolidated financial statements	$	20,921		$	11,837		$	2,797


a.	Includes silver sales of 2.9 million ounces ($21.32 per ounce average realized price).


b.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

Africa Mining Product Revenues and Production Costs



Year Ended December 31, 2015
(In millions)	By-Product				Co-Product Method
	Method				Copper				Cobalt			Total
Revenues, excluding adjustmentsa	$	1,129			$	1,129			$	287		$	1,416
Site production and delivery, before net noncash
and other costs shown below	738				639				189			828
Cobalt creditsb	(196		)		—				—			—
Royalty on metals	25				20				5			25
Net cash costs	567				659				194			853
Depreciation, depletion and amortization	257				213				44			257
Noncash and other costs, net	32			c	27				5			32
Total costs	856				899				243			1,142
Revenue adjustments, primarily for pricing on prior period open sales	(6		)		(6		)		(1		)	(7		)
Gross profit	$	267			$	224			$	43		$	267

Copper sales (millions of recoverable pounds)	467				467
Cobalt sales (millions of contained pounds)									35

Gross profit per pound of copper/cobalt:

Revenues, excluding adjustmentsa	$	2.42			$	2.42			$	8.21
Site production and delivery, before net noncash
and other costs shown below	1.58				1.37				5.40
Cobalt creditsb	(0.42		)		—				—
Royalty on metals	0.05				0.04				0.14
Unit net cash costs	1.21				1.41				5.54
Depreciation, depletion and amortization	0.55				0.46				1.26
Noncash and other costs, net	0.07			c	0.06				0.16
Total unit costs	1.83				1.93				6.96
Revenue adjustments, primarily for pricing
on prior period open sales	(0.01		)		(0.01		)		(0.02		)
Gross profit per pound	$	0.58			$	0.48			$	1.23

Reconciliation to Amounts Reported
(In millions)									Depreciation,
					Production				Depletion and
	Revenues				and Delivery				Amortization
Totals presented above	$	1,416			$	828			$	257
Royalty on metals	(25		)		—				—
Noncash and other costs, net	—				32			c	—
Revenue adjustments, primarily for pricing on prior period open sales	(7		)		—				—
Africa mining	1,384				860				257
Other mining & eliminationsd	12,498				9,475				1,422
Total mining	13,882				10,335				1,679
U.S. oil & gas operations	1,994				1,211				1,804
Corporate, other & eliminations	1				(1		)		14
As reported in FCX’s consolidated financial statements	$	15,877			$	11,545			$	3,497


a.	Includes point-of-sale transportation costs as negotiated in customer contracts.


b.	Net of cobalt downstream processing and freight costs.


c.	Includes $11 million ($0.02 per pound) for restructuring and other charges.


d.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

Africa Mining Product Revenues and Production Costs (continued)



Year Ended December 31, 2014
(In millions)	By-Product			Co-Product Method
	Method			Copper			Cobalt		Total
Revenues, excluding adjustmentsa	$	1,301		$	1,301		$	285	$	1,586
Site production and delivery, before net noncash
and other costs shown below	665			591			157		748
Cobalt creditsb	(204		)	—			—		—
Royalty on metals	29			24			5		29
Net cash costs	490			615			162		777
Depreciation, depletion and amortization	228			195			33		228
Noncash and other costs, net	22			19			3		22
Total costs	740			829			198		1,027
Revenue adjustments, primarily for pricing on prior period open sales	(1		)	(1		)	2		1
Gross profit	$	560		$	471		$	89	$	560

Copper sales (millions of recoverable pounds)	425			425
Cobalt sales (millions of contained pounds)							30

Gross profit per pound of copper/cobalt:

Revenues, excluding adjustmentsa	$	3.06		$	3.06		$	9.66
Site production and delivery, before net noncash
and other costs shown below	1.56			1.39			5.30
Cobalt creditsb	(0.48		)	—			—
Royalty on metals	0.07			0.06			0.16
Unit net cash costs	1.15			1.45			5.46
Depreciation, depletion and amortization	0.54			0.46			1.13
Noncash and other costs, net	0.05			0.04			0.11
Total unit costs	1.74			1.95			6.70
Revenue adjustments, primarily for pricing
on prior period open sales	—			—			0.07
Gross profit per pound	$	1.32		$	1.11		$	3.03

Reconciliation to Amounts Reported
(In millions)							Depreciation,
				Production			Depletion and
	Revenues			and Delivery			Amortization
Totals presented above	$	1,586		$	748		$	228
Royalty on metals	(29		)	—			—
Noncash and other costs, net	—			22			—
Revenue adjustments, primarily for pricing on prior period open sales	1			—			—
Africa mining	1,558			770			228
Other mining & eliminationsc	15,170			9,889			1,330
Total mining	16,728			10,659			1,558
U.S. oil & gas operations	4,710			1,237			2,291
Corporate, other & eliminations	—			2			14
As reported in FCX’s consolidated financial statements	$	21,438		$	11,898		$	3,863


a.	Includes point-of-sale transportation costs as negotiated in customer contracts.


b.	Net of cobalt downstream processing and freight costs.


c.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

Africa Mining Product Revenues and Production Costs (continued)



Year Ended December 31, 2013
(In millions)	By-Product			Co-Product Method
	Method			Copper		Cobalt		Total
Revenues, excluding adjustmentsa	$	1,457		$	1,457	$	205	$	1,662
Site production and delivery, before net noncash
and other costs shown below	649			614		111		725
Cobalt creditsb	(131		)	—		—		—
Royalty on metals	29			26		3		29
Net cash costs	547			640		114		754
Depreciation, depletion and amortization	246			220		26		246
Noncash and other costs, net	29			26		3		29
Total costs	822			886		143		1,029
Revenue adjustments, primarily for pricing on prior period open sales	2			2		2		4
Gross profit	$	637		$	573	$	64	$	637

Copper sales (millions of recoverable pounds)	454			454
Cobalt sales (millions of contained pounds)						25

Gross profit per pound of copper/cobalt:

Revenues, excluding adjustmentsa	$	3.21		$	3.21	$	8.02
Site production and delivery, before net noncash
and other costs shown below	1.43			1.35		4.35
Cobalt creditsb	(0.29		)	—		—
Royalty on metals	0.07			0.06		0.14
Unit net cash costs	1.21			1.41		4.49
Depreciation, depletion and amortization	0.54			0.48		1.00
Noncash and other costs, net	0.06			0.06		0.11
Total unit costs	1.81			1.95		5.60
Revenue adjustments, primarily for pricing
on prior period open sales	—			—		0.09
Gross profit per pound	$	1.40		$	1.26	$	2.51

Reconciliation to Amounts Reported
(In millions)						Depreciation,
				Production		Depletion and
	Revenues			and Delivery		Amortization
Totals presented above	$	1,662		$	725	$	246
Royalty on metals	(29		)	—		—
Noncash and other costs, net	—			29		—
Revenue adjustments, primarily for pricing on prior period open sales	4			—		—
Africa mining	1,637			754		246
Other mining & eliminationsc	16,664			10,394		1,176
Total mining	18,301			11,148		1,422
U.S. oil & gas operations	2,616			682		1,364
Corporate, other & eliminations	4			7		11
As reported in FCX’s consolidated financial statements	$	20,921		$	11,837	$	2,797


a.	Includes point-of-sale transportation costs as negotiated in customer contracts.


b.	Net of cobalt downstream processing and freight costs.


c.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

Molybdenum Mines Product Revenues and Production Costs



				Years Ended December 31,
(In millions)				2015				2014		2013
Revenues, excluding adjustmentsa				$	388			$	630	$	566
Site production and delivery, before net noncash
and other costs shown below				299				321		303
Treatment charges and other				40				43		44
Net cash costs				339				364		347
Depreciation, depletion and amortization				97				92		82
Molybdenum inventory adjustments				11				—		—
Noncash and other costs, net				13			b	7		14
Total costs				460				463		443
Gross (loss) profit				$	(72	)		$	167	$	123

Molybdenum sales (millions of recoverable pounds)a				48				51		49

Gross (loss) profit per pound of molybdenum:

Revenues, excluding adjustmentsa				$	8.14			$	12.28	$	11.65
Site production and delivery, before net noncash
and other costs shown below				6.27				6.24		6.24
Treatment charges and other				0.84				0.84		0.91
Unit net cash costs				7.11				7.08		7.15
Depreciation, depletion and amortization				2.04				1.80		1.68
Molybdenum inventory adjustments				0.22				—		—
Noncash and other costs, net				0.28			b	0.15		0.29
Total unit costs				9.65				9.03		9.12
Gross (loss) profit per pound				$	(1.51	)		$	3.25	$	2.53

Reconciliation to Amounts Reported										Copper and
(In millions)								Depreciation,		Molybdenum
				Production				Depletion and		Inventory
Year Ended December 31, 2015	Revenues			and Delivery				Amortization		Adjustments
Totals presented above	$	388		$	299			$	97	$	11
Treatment charges and other	(40		)	—				—		—
Noncash and other costs, net	—			13			b	—		—
Molybdenum mines	348			312				97		11
Other mining & eliminationsc	13,534			10,023				1,582		327
Total mining	13,882			10,335				1,679		338
U.S. oil & gas operations	1,994			1,211				1,804		—
Corporate, other & eliminations	1			(1		)		14		—
As reported in FCX’s consolidated financial statements	$	15,877		$	11,545			$	3,497	$	338

Year Ended December 31, 2014
Totals presented above	$	630		$	321			$	92	$	—
Treatment charges and other	(43		)	—				—		—
Noncash and other costs, net	—			7				—		—
Molybdenum mines	587			328				92		—
Other mining & eliminationsc	16,141			10,331				1,466		6
Total mining	16,728			10,659				1,558		6
U.S. oil & gas operations	4,710			1,237				2,291		—
Corporate, other & eliminations	—			2				14		—
As reported in FCX’s consolidated financial statements	$	21,438		$	11,898			$	3,863	$	6

Year Ended December 31, 2013
Totals presented above	$	566		$	303			$	82	$	—
Treatment charges and other	(44		)	—				—		—
Noncash and other costs, net	—			14				—		—
Molybdenum mines	522			317				82		—
Other mining & eliminationsc	17,779			10,831				1,340		3
Total mining	18,301			11,148				1,422		3
U.S. oil & gas operations	2,616			682				1,364		—
Corporate, other & eliminations	4			7				11		—
As reported in FCX’s consolidated financial statements	$	20,921		$	11,837			$	2,797	$	3


a.	Reflects sales of the molybdenum mines' production to the molybdenum sales company at market-based pricing. On a consolidated basis, realizations are based on the actual contract terms for sales to third parties; as a result, the consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table.


b.	Includes $7 million ($0.15 per pound) for restructuring and other charges.


c.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16. Also includes amounts associated with the molybdenum sales company, which includes sales of molybdenum produced by the molybdenum mines and by certain of the North and South America copper mines.

U.S. Oil & Gas Product Revenues, Cash Production Costs and Realizations




Year Ended December 31, 2015
										Total
				Natural						U.S. Oil
(In millions)	Oil			Gas				NGLs		& Gas
Oil and gas revenues before derivatives	$	1,607		$	232			$	46	$	1,885
Cash gains on derivative contracts	406			—				—		406
Realized revenues	$	2,013		$	232			$	46	2,291
Less: cash production costs										979
Cash operating margin										1,312
Less: depreciation, depletion and amortization										1,804
Less: impairment of oil and gas properties										12,980
Less: accretion and other costs										232			a
Plus: net noncash mark-to-market losses on derivative contracts										(319		)
Plus: other net adjustments										22
Gross loss										$	(14,001	)

Oil (MMBbls)	35.3
Gas (Bcf)				89.7
NGLs (MMBbls)								2.4
Oil Equivalents (MMBOE)										52.6

	Oil			Natural Gas				NGLs
	(per barrel)			(per MMBtu)				(per barrel)		Per BOE
Oil and gas revenues before derivatives	$	45.58		$	2.59			$	18.90	$	35.82
Cash gains on derivative contracts	11.53			—				—		7.72
Realized revenues	$	57.11		$	2.59			$	18.90	43.54
Less: cash production costs										18.59
Cash operating margin										24.95
Less: depreciation, depletion and amortization										34.28
Less: impairment of oil and gas properties										246.67
Less: accretion and other costs										4.41			a
Plus: net noncash mark-to-market losses on derivative contracts										(6.07		)
Plus: other net adjustments										0.43
Gross loss										$	(266.05	)

Reconciliation to Amounts Reported
(In millions)								Depreciation,		Impairment of
				Production				Depletion and		Oil and Gas
	Revenues			and Delivery				Amortization		Properties
Totals presented above	$	1,885		$	979			$	1,804	$	12,980
Cash gains on derivative contracts	406			—				—		—
Net noncash mark-to-market losses on derivative contracts	(319		)	—				—		—
Accretion and other costs	—			232			a	—		—
Other net adjustments	22			—				—		—
U.S. oil & gas operations	1,994			1,211				1,804		12,980
Total miningb	13,882			10,335				1,679		—
Corporate, other & eliminations	1			(1		)		14		164			c
As reported in FCX's consolidated financial statements	$	15,877		$	11,545			$	3,497	$	13,144


a.	Includes $188 million ($3.58 per BOE) primarily for other asset impairments and inventory write-downs, idle/terminated rig costs and prior year non-income tax assessments at the California properties.


b.	Represents the combined total for mining operations and the related eliminations, as presented in Note 16.


c.	Reflects impairment charges for international oil and gas properties, primarily related to Morocco.

U.S. Oil & Gas Product Revenues, Cash Production Costs and Realizations (continued)



Year Ended December 31, 2014										Total
										U.S. Oil
(In millions)	Oil			Natural Gas				NGLs		& Gas
Oil and gas revenues before derivatives	$	3,721		$	353			$	128	$	4,202
Cash losses on derivative contracts	(111		)	(11		)		—		(122		)
Realized revenues	$	3,610		$	342			$	128	4,080
Less: cash production costs										1,140			a
Cash operating margin										2,940
Less: depreciation, depletion and amortization										2,291
Less: impairment of oil and gas properties										3,737
Less: accretion and other costs										97			b
Plus: net noncash mark-to-market gains on derivative contracts										627
Plus: other net adjustments										3
Gross loss										$	(2,555	)

Oil (MMBbls)	40.1
Gas (Bcf)				80.8
NGLs (MMBbls)								3.2
Oil Equivalents (MMBOE)										56.8			a

	Oil			Natural Gas				NGLs
	(per barrel)			(per MMbtu)				(per barrel)		Per BOE
Oil and gas revenues before derivatives	$	92.76		$	4.37			$	39.73	$	73.98
Cash losses on derivative contracts	(2.76		)	(0.14		)		—		(2.15		)
Realized revenues	$	90.00		$	4.23			$	39.73	71.83
Less: cash production costs										20.08			a
Cash operating margin										51.75
Less: depreciation, depletion and amortization										40.34
Less: impairment of oil and gas properties										65.80
Less: accretion and other costs										1.69			b
Plus: net noncash mark-to-market gains on derivative contracts										11.03
Plus: other net adjustments										0.06
Gross loss										$	(44.99	)

Reconciliation to Amounts Reported
(In millions)								Depreciation,		Impairment of
				Production				Depletion and		Oil and Gas
	Revenues			and Delivery				Amortization		Properties
Totals presented above	$	4,202		$	1,140			$	2,291	$	3,737
Cash losses on derivative contracts	(122		)	—				—		—
Net noncash mark-to-market gains on derivative contracts	627			—				—		—
Accretion and other costs	—			97			b	—		—
Other net adjustments	3			—				—		—
U.S. oil & gas operations	4,710			1,237				2,291		3,737
Total miningc	16,728			10,659				1,558		—
Corporate, other & eliminations	—			2				14		—
As reported in FCX's consolidated financial statements	$	21,438		$	11,898			$	3,863	$	3,737

a.Following is a reconciliation of FM O&G's cash production costs per BOE for 2014 unit net cash costs, excluding Eagle Ford:



	Cash Production Costs (in millions)		Oil Equivalents (MMBOE)	Cash Production Costs Per BOE
Presented above	$	1,140	56.8	$	20.08
Less: Eagle Ford	113		8.7	12.97
	$	1,027	48.1	$	21.36


b.	Includes $46 million ($0.81 per BOE) primarily for idle/terminated rig costs and inventory write-downs.


c.	Represents the combined total for mining operations and the related eliminations, as presented in Note 16.

U.S. Oil & Gas Product Revenues, Cash Production Costs and Realizations (continued)



Seven Months from June 1, 2013, to December 31, 2013								Total
								U.S. Oil
(In millions)	Oil			Natural Gas		NGLs		& Gas
Oil and gas revenues before derivatives	$	2,655		$	202	$	92	$	2,949
Cash (losses) gains on derivative contracts	(36		)	14		—		(22		)
Realized revenues	$	2,619		$	216	$	92	2,927
Less: cash production costs								653			a
Cash operating margin								2,274
Less: depreciation, depletion and amortization								1,364
Less: accretion and other costs								29
Plus: net noncash mark-to-market losses on derivative contracts								(312		)
Plus: other net adjustments								1
Gross profit								$	570

Oil (MMBbls)	26.6
Gas (Bcf)				54.2
NGLs (MMBbls)						2.4
Oil Equivalents (MMBOE)								38.1			a

	Oil			Natural Gas		NGLs
	(per barrel)			(per MMbtu)		(per barrel)		Per BOE
Oil and gas revenues before derivatives	$	99.67		$	3.73	$	38.20	$	77.45
Cash (losses) gains on derivative contracts	(1.35		)	0.26		—		(0.58		)
Realized revenues	$	98.32		$	3.99	$	38.20	76.87
Less: cash production costs								17.14			a
Cash operating margin								59.73
Less: depreciation, depletion and amortization								35.81
Less: accretion and other costs								0.79
Plus: net noncash mark-to-market losses on derivative contracts								(8.20		)
Plus: other net adjustments								0.04
Gross profit								$	14.97

Reconciliation to Amounts Reported
(In millions)						Depreciation,
				Production		Depletion and
	Revenues			and Delivery		Amortization
Totals presented above	$	2,949		$	653	$	1,364
Cash losses on derivative contracts	(22		)	—		—
Net noncash mark-to-market losses on derivative contracts	(312		)	—		—
Accretion and other costs	—			29		—
Other net adjustments	1			—		—
U.S. oil & gas operations	2,616			682		1,364
Total miningb	18,301			11,148		1,422
Corporate, other & eliminations	4			7		11
As reported in FCX's consolidated financial statements	$	20,921		$	11,837	$	2,797

a.Following is a reconciliation of FM O&G's cash production costs per BOE for 2013 unit net cash costs, excluding Eagle Ford:



	Cash Production Costs (in millions)		Oil Equivalents (MMBOE)	Cash Production Costs Per BOE
Presented above	$	653	38.1	$	17.14
Less: Eagle Ford	119		9.9	11.97
	$	534	28.2	$	18.95


b.	Represents the combined total for all mining operations and the related eliminations, as presented in Note 16.

CAUTIONARY STATEMENT

Our discussion and analysis contains forward-looking statements in which we discuss factors we believe may affect our future performance. Forward-looking statements are all statements other than statements of historical facts, such as projections or expectations relating to ore grades and milling rates; production and sales volumes; unit net cash costs; cash production costs per BOE; operating cash flows; capital expenditures; debt reduction initiatives; exploration efforts and results; development and production activities and costs; liquidity; tax rates; the impact of copper, gold, molybdenum, cobalt, crude oil and natural gas price changes; the impact of deferred intercompany profits on earnings; reserve estimates; future dividend payments, and share purchases and sales. The words “anticipates,” “may,” “can,” “plans,” “believes,” “potential,” “estimates,” “expects,” “projects,” “targets,” “intends,” “likely,” “will,” “should,” “to be” and any similar expressions are intended to identify those assertions as forward-looking statements. The declaration of dividends is at the discretion of the Board and will depend on our financial results, cash requirements, future prospects, and other factors deemed relevant by the Board.

We caution readers that forward-looking statements are not guarantees of future performance and actual results may differ materially from those anticipated, projected or assumed in the forward-looking statements. Important factors that can cause our actual results to differ materially from those anticipated in the forward-looking statements include supply of, demand for, and prices of copper, gold, molybdenum, cobalt, crude oil and natural gas; mine sequencing; production rates; drilling results; potential effects of cost and capital expenditure reductions and production curtailments on financial results and cash flow; the outcome of our strategic review of our oil and gas business; the outcome of our debt reduction initiatives; potential additional oil and gas property impairment charges; potential inventory adjustments; potential impairment of long-lived mining assets; the outcome of ongoing discussions with the Indonesian government regarding PT-FI's COW; PT-FI's ability to obtain renewal of its export permit after August 8, 2016; the potential effects of violence in Indonesia generally and in the province of Papua; the resolution of administrative disputes in the DRC; industry risks; regulatory changes; political risks; weather- and climate-related risks; labor relations; environmental risks; litigation results and other factors described in more detail in Part I, Item 1A. “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2015.

Investors are cautioned that many of the assumptions upon which our forward-looking statements are based are likely to change after the forward-looking statements are made, including for example commodity prices, which we cannot control, and production volumes and costs, some aspects of which we may not be able to control. Further, we may make changes to our business plans that could affect our results. We caution investors that we do not intend to update forward-looking statements more frequently than quarterly notwithstanding any changes in our assumptions, changes in business plans, actual experience or other changes, and we undertake no obligation to update any forward-looking statements.

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